Government gives use the money for subsidies to school so the poor people can study, factory, petrol so the price not to high so the market price will be stable and making public goods etc. But where the government gets the money? The government gets the money taxes, debt, income, fines or inflation Taxes are the main supply of government money. Taxes are money taken out of the collective pockets of the people and put into the collective pockets of the politicians. There are two types of tax direct and indirect tax. Direct tax is Income Tax Department administers various direct taxes, which have different rates Pay As You Earn (PAYE), corporation tax, withholding tax and advance tax. Indirect tax is a tax collected by an intermediary from the person who bears the ultimate economic burden of the tax such as the consumer. Example of indirect tax is sales tax, a specific tax, value added tax (VAT), or goods and services tax (GST). Debt is money borrowed. Debt isn’t money created out of a vacuum, however. In the real world, there is only so much money to be lent. When government competes for that money, they are willing to pay any price to get it, since they can back their borrowing with the faith and credit of their potential taxpayers. Even though governments can pay exorbitant fees and interest on this kind of debt, there is ultimately a limit to it, and they can reach a breaking point where there simply is no more money to borrow. Income is money that government earns by participating as an actor in the free market. They offer some good or service, and they get paid to do so. Some people will put fees in this category. The problem with government participating in the free market in this way is that they can do things other people can’t. It’s like having the referee be a member of a team in a sporting match. It’s simply not fair. But government is more than a referee. It also writes the rules. It can call a foul for simply getting in its way in the free market. Fines are money collected as punishment for crimes committed by individuals or corporations. Fines are a useful remedy, quite easy to collect and quite easy to impose. It’s a very friendly way to punish behavior that, while bad, isn’t completely dangerous. The inflation is a sort of invisible tax. It’s a tax because it reduces the value of all the money everywhere at the same time. However, there is another powerful force called deflation. That’s the force that drives the value of money up as demand for it increases due to an expanding economy. Deflation can be worse than inflation since it discourages people from behaving in ways that will help the economy grow. If government prints money at a rate that keeps the value of money constant, then they can raise money without hurting anyone. The conclusion is the government gets the money form us the citizen and the money will return again with a form of public goods and subsides.
Government might finance its expenditure by taking it from tax. Tax is devided into two, direct tax and indirect tax, direct tax is a tax that is given to a salary, indirect tax apply if we buy goods and services. Government also finance its expenditure by tariff and custom when a country want to import their goods to a country there will be tariff or custom. Government also get money from natural resources, for example freeport in papua give commision to government because they take indonesian natural resources. Government can also borrow money at a healthy interest rate. This is really a future tax, since one day those loans will come due, and that generation of taxpayers will pay the bill. Government sometimes also raising funds by collects money for something like Social Security and rather than put it in a bank account, they spend it. This is really government borrowing from itself. Social Security and Medicare were used for this purpose. There is no money in these accounts, and we can never pay enough taxes to finance it. Government also have power to print money and can raise money by creating it. Government spend almost all the money to subsidies, government usually subsidies gasoline, cheap cooking gas, education, medical. Government also create public roads and bridge, government usually repair a bad public roads. Other than that government give subsidies to public transportation such as mikrolet and transjakarta, transjakarta is cheaper than the other public transportation because the government subsidies it so the traffic is getting better and better, but sometimes people in Jakarta don’t want to use it because many thief and burglar in transjakarta. Government create a cheap rice called “beras bulog” its usually cheaper than the regular rice, its created for poor people that have a special identity card that only given to poor people. Government in Indonesia usually corrupt tax for their personal use, so not all the money is used for public expanditure. In a developed country such as Australia, the tax is high but the corruption is small so the benefit from government to secure the citizen to get a medical benefit, free school fee. Actually Indonesia is lucky because we are rich of natural resources, such as mining of cooper and gold in Papua. Our government also spend the money on the salary of teacher in the free school, government need to pay them.
Government can fund their expenditures by taking taxes from the citizens. There are two types of tax which is a direct tax , and indirect tax. Direct tax Is the tax that was imposed when we received our salary so automatically our salary will be cut by the tax, and indirect tax is the tax that was imposed on goods&services. The richer you are , the more tax you will pay based on your incomes. Because itch people and enjoy more public services than the poor people for ex: they often use the public road , because they have a lot of cars and they use it every day. The government often uses the money that they get from taxes to subsidize several goods & services. The government already subsidizes the price of petrol and gasoline in Indonesia , The price of Trans Jakarta is also very cheap it only cost 4000 Rupiah, and you can stop at any station that you want. The government subsidizes all of these products just to make the citizens satisfied and happy , because if the price is too high it will be hard for some of the poor people to buy those products just like petrol and gasoline , The government also wants to reduce the traffic jam so they subsidize the price of Trans Jakarta , more people will choose to take a bus rather than driving with their own cars because the price of transportation is cheaper using Trans Jakarta.The government also get money from fines , when someone broke the law for ex for copy right , you can see there is a several amount of money that need t be paid wen you broke those laws.And some of the harmful goods just like ciggaretes,alcohol,drugs ,etc .More taxes were imposed on he harmful goods,the governments hope that this action will reduce the demand from harmful goods.The government also imposed more taxes on the imported goods ,there will be tariff or custom .The government hope by doing this the value our money will increase,more people will buy our country products.Some of the money were also used for public goods not just to subsidize the goods,and services.The government use the money that they get to built public roads,free school for the poor people,light houses,bridges, and street road,free hospital for the poor people.The government gives a lot of benefits to the citizens that why the people with more income need to pay taxes because they enjoy more public goods,and subsidizes products more than the poor people and the normal peoples.The government also use they money for charity for the poor people ,and unemployment .The government also make some work field for the unemployment so they can earn money for their own living,usually the government give a trainings those peoples .The governments also pay the salary of the teacher that is working in the free school ,and the peoples that works in the free hospitals . So I'm think it’s better to do our duty to pay taxes ,because those taxes is a fees for public goods ,and subsidies products.
The government might finance the expenditure from taxes collected from the people living in the country and also from borrowing. There are many different types of taxes – income, corporate, excise and payroll. Income taxes are those for the working class people that pay an amount of their income – depending on how much they make – towards the government, and is designed to be progressive, which means, the higher income a person makes, the higher percentage of tax they have to pay. This type of tax has to be paid by every working person in the country and generates the largest revenue source. For instance, a man named Bill makes $100,000 per month, while another man named Sam makes $25,000 a month. Since they earn different wages, their tax percentage they have to pay is different, so Bill needs to pay taxes amounting to $8,000 while Sam only pays $2,000. Corporate taxes are those for a corporation and how much profit they make. These corporations must pay the tax rate anywhere from 15-35% of the profit, depending on the size of the profits they make. Corporate taxes do not generate as large of a revenue source as income taxes because corportations avoid paying high tax rates by finding “loopholes” in the tax code. For example, a corporation profit $19 million, and so they have to pay at around $6,65 million as tax, but because of ‘hiding’ or finding loopholes in the tax code, the corporation only needs to pay $3 million as tax. Excise taxes, also known as sin taxes, apply to de-merit goods, such as cigarettes, alcohol, gambling, etc that are harmful or unecessary for the country’s people. It is also applied to such de-merit goods so that the consumer will less likely buy the product because of its price, causing the demand for the de-merit good to fall. These taxes are normally used as additional revenue for large projects conducted by the government. For example, a bottle of wine costs $40, but because of the excise tax for the wine, the price goes up to $48, causing a more expensive bottle of wine, making consumers think twice on buying it. Payroll taxes are designed as trust funds, which are used for specific purposes like paying social security, healthcare, unemployment, etc. These taxes are not very high to a person’s income – usually around 1-8% of their wages – and is taken directly from the person’s paycheck. An example is, a worker called Tina earns $40,000 a month, but because of payroll taxes, she gets $38,800 as her monthly wages. Borrowing money takes place when the government is spending more money than there is from tax revenues. When this happens, the Treasury issues bonds that will have to be paid in the future by the country. For instance, the government is short for $10 billion. The Treasury issues bonds and borrows money from another country. From this point onwards, the country will have a debt of $10 billion to this other country and will have to pay it in the long term, with interest.
Actually, what is government expenditure? and what is it used for? Government expenditure is the spending of government to provide public goods, subsidies, and other basic necessities of the citizens. It is used to improve lives and help citizens of the country. How do the government get money to fund the expenditure? 1. Charging tax There are two common types of taxes. The first one is DIRECT tax. Direct tax is the type of tax that is charged directly. Example: Salaries. the second type is INDIRECT tas. Indirect tax is the type of tax that is charged indirectly. Example: When we buy clothes in a mall. For some people, tax is a burden. But those people aren't able to see in a long-term scope. Taxes are not a burden. Because if we pay taxes, government have more money to increase subsidies and will be able to help even more people by providing public goods and services. 2. Increasing Exports First, exported goods/services are the goods/services that we sell to other countries. Keyword: SELL. Which means that we will get money from the sales. This money can also be used to finance government's expenditure. If a country exports more than it imports, the country's currency might rise as well. When the currency rises, the goods imported will be cheaper as well. Example, USA needs to import pencils from Indonesia which will cost Rp.500,000. In 2012, $1=Rp.9,000. But in 2013, $1=Rp.10,000. In 2012, USA needs to pay $55.56. But in 2013, USA only needs to pay $50. So, just by raising the rate of currency, the government can save $5.56 more to finance public expenditure. 3. Borrowing Money from Other Countries Sometimes, even the most wealthy country need money. And when the two ways that I stated before doesn't really affect anythhing, usually, the country's last choice is to borrow money. By borrowing money, they can still give enough public goods and services and enough subsidies for citizens.
But nowadays, In Indonesia, some people doesn't like to use public transports to go to places. The question is "WHY?". Well, it is because inside the bus or any other public transportations, there are thieves that might kill us if we don't want to give our valuable things. So, it might not be very safe. And again, WHY do they STEAL? The reason is, because sometimes the subsidies were used by the rich one, not the poor one. And some poor people might not be able to get the subsidy anymore because it has already been used by the rich. And that might be a reason for some poor people to steal, because they do not have enough money to fulfill their daily needs.
Government expenditure is used to provide citizens with public goods, subsidies, and other goods and services, they provide them with education, health/hospitality, food etc to provide goods for their daily lives. But how does the government get all those money to afford and finance all the goods that they provide us? • Taxes : There are 2 types of taxes : -income tax (direct tax) ;which is from the wages and incomes. It's non avoidable. -value added tax (indirect tax); it's from our spendings of a product.
•borrowing(bonds) -the government can get money (loans) from borrowing and making bonds to the banks
•non-tax - fees ; for granting issuance for permits or license , such as: drivers license, hunting or fishings, or vehicle registration, trade services(airplanes, ships,etc) -lease ; for people to rent the lands provided by the government -fines ; when criminal doings is forced to pay a certain amount of money to the government from the law enforcement -user fees ; collection in exchange for the use of public goods and facilities such as tolls and toll roads
•printing more money - this method of gaining their money is not so efficient because this can cause inflation to the country which makes the economy grow smaller and poorer
In Indonesia, governments already subsidies the petrol and transport for the county and those income from transjakarta, pertamina, Garuda Indonesia can be used for addition of the governments expenditure. The subsidies that the government provide is not only transportation, they provide people with education too for the people to have knowledge so they can work later in the future and decrease the number of poverty for the country and can grow the number of taxes which makes the government richer and can make the economic grow. But there are different kinds of incomes and financials that each government use to get money, like hongkong ; Hongkong is a tax free country , they get their income by the MRT and reselling land, but they became very rich with that method and until now the economy of Hongkong is growing.
Government expenditure is expenses to provide citizen subsidies, public good and services such as education, services, and daily products. Government collects taxes, borrow and print money to be able to afford those. Taxes are by far the most important source of public sector revenue. Not surprisingly, therefore, as public expenditures around the world have risen over time as the proportion of total expenditure so too far has the tax burden. There 2 main types of tax; Direct and Indirect Tax. Direct Tax is taken directly from firms or individuals and their income or wealth. Indirect tax is taken only indirectly from income when they are spent on goods and services. Government can also borrow money or a future tax, since one day those loans will come due, and that generation of taxpayers will pay the bill. Government sometimes also raising funds by collects money for something like Social Security and rather than put it in a bank account, they spend it. This is really government borrowing from itself. Social Security and Medicare were used for this purpose. There is no money in these accounts, and we can never pay enough taxes to finance it. Also, government can get money from making bonds to the banks. Making bonds to the bank means to corporate with the banks to borrow its money and pay with interest, which also can be called borrowing from Private Sector Company. Printing money is also a method of financing government expenditure but however it is not efficient because it will cause high inflation and damage the economy of a country. The best way would be balancing those three combinations so that the economy in a country will run well. Besides those three, there are more ways to get government expenditure from Fines and Deflation. Fines are money collected from the law and regulation breaker; if they broke the law they have to pay fine. For example, in Singapore, littering cause them fine of 3000 dollar Singapore. It’s the matter of laws, regulations, and how the governments manage the country. Fines are a useful remedy, quite easy to collect and impose. Deflation is the force that drives the value of money up as demand for it increases due to an expanding economy. Deflation can be worse than Inflation since it discourages people from behaving in ways that will help the economy grow. However, Indonesia is struggling within Government Finance Expenditure because the inflation in Indonesia is really high and not many citizen want to use public goods. The reason is because the crime and risk is too high; people tend to steal in the public transportation. Poor people also can’t get good facilities for education and health care because of high inflation. Subsidized goods and services are often used and enjoyed by people who pay tax, which decrease the supply for people who need it. Also fines, citizen of Indonesia tend to bribe police officers. That makes the law and regulation in Indonesia doesn’t work really efficiently because the monthly wage each worker get is low. People are easy to be bribe. Government gets money more from Taxes rather than Subsidies here in Indonesia but in return, they supple public goods and services. -Valerie
CHRISTHOPER MATTHEW 9 BUS./03 05/08/13 Government can finance its expenditures from: 1)TAXES:-> is a financial charge or other levy imposed upon a taxpayer (an individual/ legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law. :-> can be either a 'direct' tax or an 'indirect' tax. 'Direct; taxes are imposed on the person, which is non-avoidable. In the other hand, 'indirect taxes' are imposed on goods and services, and is avoidable (if you don't but the goods/ services) :-> Government can also get money through 'non-tax revenue'. Example sources of 'non-tax revenues' are: revenue from state-owned enterprises (ex. state-owned liquor stores), fines collected and assets forfeitured as a penalty (ex. parking fines, court costs), and more.
2)GOVERNMENT BORROWING:-> government debt (also known as public/ national debt) is the debt owed by a central government. By contrast, the annual 'government deficit' refers to the difference between government receipts and spending in a single year, that is, the increase of debt over a particular year. :-> it is one method of financing government operations, but it is not the only method. Governments can also create money to monetize their debts, thereby removing the need to pay interest; but it actually only reduces government interest costs rather than truly cancelling government debt, and can result in 'hyperinflation' if used unsparingly. (occurs when a country experiences very high and fast rates of inflation, which cause the population to minimize their holdings of money)
3)INFLATION/ PRINTING OF MONEY:-> is a rise in the general level of prices of goods and services in an economy over a period of time. :-> inflation reflects a reduction in the purchasing power per unit of money. :-> a chief measure of price inflation is the inflation rate, the annualized percentage change in a general 'price index'. :-> Inflation effects on an economy varies and can be simultaneously positive/ negative. Negative effects include an increase in the opportunity cost of holding money. When inflation gets too high, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future. Positive effect include ensuring that central banks can adjust real interest rates, and encouraging investment in non-monetary capital projects.
:-> today, most economists favor a low and steady rate of inflation.It reduces the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reduces the risk that a 'liquidity trap' prevents monetary policy from stabilizing the economy.
Government gives use the money for subsidies to school so the poor people can study, factory, petrol so the price not to high so the market price will be stable and making public goods etc. But where the government gets the money? The government gets the money taxes, debt, income, fines or inflation
ReplyDeleteTaxes are the main supply of government money. Taxes are money taken out of the collective pockets of the people and put into the collective pockets of the politicians. There are two types of tax direct and indirect tax. Direct tax is Income Tax Department administers various direct taxes, which have different rates Pay As You Earn (PAYE), corporation tax, withholding tax and advance tax. Indirect tax is a tax collected by an intermediary from the person who bears the ultimate economic burden of the tax such as the consumer. Example of indirect tax is sales tax, a specific tax, value added tax (VAT), or goods and services tax (GST).
Debt is money borrowed. Debt isn’t money created out of a vacuum, however. In the real world, there is only so much money to be lent. When government competes for that money, they are willing to pay any price to get it, since they can back their borrowing with the faith and credit of their potential taxpayers. Even though governments can pay exorbitant fees and interest on this kind of debt, there is ultimately a limit to it, and they can reach a breaking point where there simply is no more money to borrow.
Income is money that government earns by participating as an actor in the free market. They offer some good or service, and they get paid to do so. Some people will put fees in this category. The problem with government participating in the free market in this way is that they can do things other people can’t. It’s like having the referee be a member of a team in a sporting match. It’s simply not fair. But government is more than a referee. It also writes the rules. It can call a foul for simply getting in its way in the free market.
Fines are money collected as punishment for crimes committed by individuals or corporations. Fines are a useful remedy, quite easy to collect and quite easy to impose. It’s a very friendly way to punish behavior that, while bad, isn’t completely dangerous.
The inflation is a sort of invisible tax. It’s a tax because it reduces the value of all the money everywhere at the same time. However, there is another powerful force called deflation. That’s the force that drives the value of money up as demand for it increases due to an expanding economy. Deflation can be worse than inflation since it discourages people from behaving in ways that will help the economy grow. If government prints money at a rate that keeps the value of money constant, then they can raise money without hurting anyone.
The conclusion is the government gets the money form us the citizen and the money will return again with a form of public goods and subsides.
Good work Edssel.
ReplyDeleteGovernment might finance its expenditure by taking it from tax. Tax is devided into two, direct tax and indirect tax, direct tax is a tax that is given to a salary, indirect tax apply if we buy goods and services. Government also finance its expenditure by tariff and custom when a country want to import their goods to a country there will be tariff or custom. Government also get money from natural resources, for example freeport in papua give commision to government because they take indonesian natural resources. Government can also borrow money at a healthy interest rate. This is really a future tax, since one day those loans will come due, and that generation of taxpayers will pay the bill. Government sometimes also raising funds by collects money for something like Social Security and rather than put it in a bank account, they spend it. This is really government borrowing from itself. Social Security and Medicare were used for this purpose. There is no money in these accounts, and we can never pay enough taxes to finance it. Government also have power to print money and can raise money by creating it. Government spend almost all the money to subsidies, government usually subsidies gasoline, cheap cooking gas, education, medical. Government also create public roads and bridge, government usually repair a bad public roads. Other than that government give subsidies to public transportation such as mikrolet and transjakarta, transjakarta is cheaper than the other public transportation because the government subsidies it so the traffic is getting better and better, but sometimes people in Jakarta don’t want to use it because many thief and burglar in transjakarta. Government create a cheap rice called “beras bulog” its usually cheaper than the regular rice, its created for poor people that have a special identity card that only given to poor people. Government in Indonesia usually corrupt tax for their personal use, so not all the money is used for public expanditure. In a developed country such as Australia, the tax is high but the corruption is small so the benefit from government to secure the citizen to get a medical benefit, free school fee. Actually Indonesia is lucky because we are rich of natural resources, such as mining of cooper and gold in Papua. Our government also spend the money on the salary of teacher in the free school, government need to pay them.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteGovernment can fund their expenditures by taking taxes from the citizens. There are two types of tax which is a direct tax , and indirect tax. Direct tax Is the tax that was imposed when we received our salary so automatically our salary will be cut by the tax, and indirect tax is the tax that was imposed on goods&services. The richer you are , the more tax you will pay based on your incomes. Because itch people and enjoy more public services than the poor people for ex: they often use the public road , because they have a lot of cars and they use it every day. The government often uses the money that they get from taxes to subsidize several goods & services. The government already subsidizes the price of petrol and gasoline in Indonesia , The price of Trans Jakarta is also very cheap it only cost 4000 Rupiah, and you can stop at any station that you want. The government subsidizes all of these products just to make the citizens satisfied and happy , because if the price is too high it will be hard for some of the poor people to buy those products just like petrol and gasoline , The government also wants to reduce the traffic jam so they subsidize the price of Trans Jakarta , more people will choose to take a bus rather than driving with their own cars because the price of transportation is cheaper using Trans Jakarta.The government also get money from fines , when someone broke the law for ex for copy right , you can see there is a several amount of money that need t be paid wen you broke those laws.And some of the harmful goods just like ciggaretes,alcohol,drugs ,etc .More taxes were imposed on he harmful goods,the governments hope that this action will reduce the demand from harmful goods.The government also imposed more taxes on the imported goods ,there will be tariff or custom .The government hope by doing this the value our money will increase,more people will buy our country products.Some of the money were also used for public goods not just to subsidize the goods,and services.The government use the money that they get to built public roads,free school for the poor people,light houses,bridges, and street road,free hospital for the poor people.The government gives a lot of benefits to the citizens that why the people with more income need to pay taxes because they enjoy more public goods,and subsidizes products more than the poor people and the normal peoples.The government also use they money for charity for the poor people ,and unemployment .The government also make some work field for the unemployment so they can earn money for their own living,usually the government give a trainings those peoples .The governments also pay the salary of the teacher that is working in the free school ,and the peoples that works in the free hospitals . So I'm think it’s better to do our duty to pay taxes ,because those taxes is a fees for public goods ,and subsidies products.
DeleteThe government might finance the expenditure from taxes collected from the people living in the country and also from borrowing. There are many different types of taxes – income, corporate, excise and payroll.
ReplyDeleteIncome taxes are those for the working class people that pay an amount of their income – depending on how much they make – towards the government, and is designed to be progressive, which means, the higher income a person makes, the higher percentage of tax they have to pay. This type of tax has to be paid by every working person in the country and generates the largest revenue source. For instance, a man named Bill makes $100,000 per month, while another man named Sam makes $25,000 a month. Since they earn different wages, their tax percentage they have to pay is different, so Bill needs to pay taxes amounting to $8,000 while Sam only pays $2,000.
Corporate taxes are those for a corporation and how much profit they make. These corporations must pay the tax rate anywhere from 15-35% of the profit, depending on the size of the profits they make. Corporate taxes do not generate as large of a revenue source as income taxes because corportations avoid paying high tax rates by finding “loopholes” in the tax code. For example, a corporation profit $19 million, and so they have to pay at around $6,65 million as tax, but because of ‘hiding’ or finding loopholes in the tax code, the corporation only needs to pay $3 million as tax.
Excise taxes, also known as sin taxes, apply to de-merit goods, such as cigarettes, alcohol, gambling, etc that are harmful or unecessary for the country’s people. It is also applied to such de-merit goods so that the consumer will less likely buy the product because of its price, causing the demand for the de-merit good to fall. These taxes are normally used as additional revenue for large projects conducted by the government. For example, a bottle of wine costs $40, but because of the excise tax for the wine, the price goes up to $48, causing a more expensive bottle of wine, making consumers think twice on buying it.
Payroll taxes are designed as trust funds, which are used for specific purposes like paying social security, healthcare, unemployment, etc. These taxes are not very high to a person’s income – usually around 1-8% of their wages – and is taken directly from the person’s paycheck. An example is, a worker called Tina earns $40,000 a month, but because of payroll taxes, she gets $38,800 as her monthly wages.
Borrowing money takes place when the government is spending more money than there is from tax revenues. When this happens, the Treasury issues bonds that will have to be paid in the future by the country.
For instance, the government is short for $10 billion. The Treasury issues bonds and borrows money from another country. From this point onwards, the country will have a debt of $10 billion to this other country and will have to pay it in the long term, with interest.
Actually, what is government expenditure? and what is it used for? Government expenditure is the spending of government to provide public goods, subsidies, and other basic necessities of the citizens. It is used to improve lives and help citizens of the country. How do the government get money to fund the expenditure?
ReplyDelete1. Charging tax
There are two common types of taxes. The first one is DIRECT tax. Direct tax is the type of tax that is charged directly. Example: Salaries. the second type is INDIRECT tas. Indirect tax is the type of tax that is charged indirectly. Example: When we buy clothes in a mall. For some people, tax is a burden. But those people aren't able to see in a long-term scope. Taxes are not a burden. Because if we pay taxes, government have more money to increase subsidies and will be able to help even more people by providing public goods and services.
2. Increasing Exports
First, exported goods/services are the goods/services that we sell to other countries. Keyword: SELL. Which means that we will get money from the sales. This money can also be used to finance government's expenditure. If a country exports more than it imports, the country's currency might rise as well. When the currency rises, the goods imported will be cheaper as well. Example, USA needs to import pencils from Indonesia which will cost Rp.500,000. In 2012, $1=Rp.9,000. But in 2013, $1=Rp.10,000. In 2012, USA needs to pay $55.56. But in 2013, USA only needs to pay $50. So, just by raising the rate of currency, the government can save $5.56 more to finance public expenditure.
3. Borrowing Money from Other Countries
Sometimes, even the most wealthy country need money. And when the two ways that I stated before doesn't really affect anythhing, usually, the country's last choice is to borrow money. By borrowing money, they can still give enough public goods and services and enough subsidies for citizens.
But nowadays, In Indonesia, some people doesn't like to use public transports to go to places. The question is "WHY?". Well, it is because inside the bus or any other public transportations, there are thieves that might kill us if we don't want to give our valuable things. So, it might not be very safe. And again, WHY do they STEAL? The reason is, because sometimes the subsidies were used by the rich one, not the poor one. And some poor people might not be able to get the subsidy anymore because it has already been used by the rich. And that might be a reason for some poor people to steal, because they do not have enough money to fulfill their daily needs.
Government expenditure is used to provide citizens with public goods, subsidies, and other goods and services, they provide them with education, health/hospitality, food etc to provide goods for their daily lives. But how does the government get all those money to afford and finance all the goods that they provide us?
ReplyDelete• Taxes :
There are 2 types of taxes :
-income tax (direct tax) ;which is from the wages and incomes. It's non avoidable.
-value added tax (indirect tax); it's from our spendings of a product.
•borrowing(bonds)
-the government can get money (loans) from borrowing and making bonds to the banks
•non-tax
- fees ; for granting issuance for permits or license , such as: drivers license, hunting or fishings, or vehicle registration, trade services(airplanes, ships,etc)
-lease ; for people to rent the lands provided by the government
-fines ; when criminal doings is forced to pay a certain amount of money to the government from the law enforcement
-user fees ; collection in exchange for the use of public goods and facilities such as tolls and toll roads
•printing more money
- this method of gaining their money is not so efficient because this can cause inflation to the country which makes the economy grow smaller and poorer
In Indonesia, governments already subsidies the petrol and transport for the county and those income from transjakarta, pertamina, Garuda Indonesia can be used for addition of the governments expenditure.
The subsidies that the government provide is not only transportation, they provide people with education too for the people to have knowledge so they can work later in the future and decrease the number of poverty for the country and can grow the number of taxes which makes the government richer and can make the economic grow. But there are different kinds of incomes and financials that each government use to get money, like hongkong ; Hongkong is a tax free country , they get their income by the MRT and reselling land, but they became very rich with that method and until now the economy of Hongkong is growing.
Government expenditure is expenses to provide citizen subsidies, public good and services such as education, services, and daily products. Government collects taxes, borrow and print money to be able to afford those. Taxes are by far the most important source of public sector revenue. Not surprisingly, therefore, as public expenditures around the world have risen over time as the proportion of total expenditure so too far has the tax burden. There 2 main types of tax; Direct and Indirect Tax. Direct Tax is taken directly from firms or individuals and their income or wealth. Indirect tax is taken only indirectly from income when they are spent on goods and services. Government can also borrow money or a future tax, since one day those loans will come due, and that generation of taxpayers will pay the bill. Government sometimes also raising funds by collects money for something like Social Security and rather than put it in a bank account, they spend it. This is really government borrowing from itself. Social Security and Medicare were used for this purpose. There is no money in these accounts, and we can never pay enough taxes to finance it. Also, government can get money from making bonds to the banks. Making bonds to the bank means to corporate with the banks to borrow its money and pay with interest, which also can be called borrowing from Private Sector Company. Printing money is also a method of financing government expenditure but however it is not efficient because it will cause high inflation and damage the economy of a country. The best way would be balancing those three combinations so that the economy in a country will run well. Besides those three, there are more ways to get government expenditure from Fines and Deflation. Fines are money collected from the law and regulation breaker; if they broke the law they have to pay fine. For example, in Singapore, littering cause them fine of 3000 dollar Singapore. It’s the matter of laws, regulations, and how the governments manage the country. Fines are a useful remedy, quite easy to collect and impose. Deflation is the force that drives the value of money up as demand for it increases due to an expanding economy. Deflation can be worse than Inflation since it discourages people from behaving in ways that will help the economy grow.
ReplyDeleteHowever, Indonesia is struggling within Government Finance Expenditure because the inflation in Indonesia is really high and not many citizen want to use public goods. The reason is because the crime and risk is too high; people tend to steal in the public transportation. Poor people also can’t get good facilities for education and health care because of high inflation. Subsidized goods and services are often used and enjoyed by people who pay tax, which decrease the supply for people who need it. Also fines, citizen of Indonesia tend to bribe police officers. That makes the law and regulation in Indonesia doesn’t work really efficiently because the monthly wage each worker get is low. People are easy to be bribe. Government gets money more from Taxes rather than Subsidies here in Indonesia but in return, they supple public goods and services. -Valerie
CHRISTHOPER MATTHEW
ReplyDelete9 BUS./03
05/08/13
Government can finance its expenditures from:
1)TAXES:-> is a financial charge or other levy imposed upon a taxpayer (an individual/ legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law.
:-> can be either a 'direct' tax or an 'indirect' tax. 'Direct; taxes are imposed on the person, which is non-avoidable. In the other hand, 'indirect taxes' are imposed on goods and services, and is avoidable (if you don't but the goods/ services)
:-> Government can also get money through 'non-tax revenue'. Example sources of 'non-tax revenues' are: revenue from state-owned enterprises (ex. state-owned liquor stores), fines collected and assets forfeitured as a penalty (ex. parking fines, court costs), and more.
2)GOVERNMENT BORROWING:-> government debt (also known as public/ national debt) is the debt owed by a central government. By contrast, the annual 'government deficit' refers to the difference between government receipts and spending in a single year, that is, the increase of debt over a particular year.
:-> it is one method of financing government operations, but it is not the only method. Governments can also create money to monetize their debts, thereby removing the need to pay interest; but it actually only reduces government interest costs rather than truly cancelling government debt, and can result in 'hyperinflation' if used unsparingly. (occurs when a country experiences very high and fast rates of inflation, which cause the population to minimize their holdings of money)
3)INFLATION/ PRINTING OF MONEY:-> is a rise in the general level of prices of goods and services in an economy over a period of time.
:-> inflation reflects a reduction in the purchasing power per unit of money.
:-> a chief measure of price inflation is the inflation rate, the annualized percentage change in a general 'price index'.
:-> Inflation effects on an economy varies and can be simultaneously positive/ negative. Negative effects include an increase in the opportunity cost of holding money. When inflation gets too high, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future.
Positive effect include ensuring that central banks can adjust real interest rates, and encouraging investment in non-monetary capital projects.
:-> today, most economists favor a low and steady rate of inflation.It reduces the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reduces the risk that a 'liquidity trap' prevents monetary policy from stabilizing the economy.
They’ve experienced a completely illogical and unexplained swing from perfect health in the Milton Barbarosh
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