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Distinguish between Grants and Subsidies. - Leaving Cert Business - Question 7 - 2003
Question 7
Distinguish between Grants and Subsidies.
Worked Solution & Example Answer:Distinguish between Grants and Subsidies. - Leaving Cert Business - Question 7 - 2003
Step 1
Grants
Answer
Grants are non-repayable amounts of finance provided by the Government and the EU as an economic incentive for businesses. They aim to overcome specific difficulties or obstacles, particularly in geographical areas like the Gaeltacht or regions with high unemployment. Various grants are available, including those from the European Regional Fund, European Social Fund, and the European Cohesion Fund, which support initiatives such as:
- Infrastructure development
- Training and employment
- Market research
- Job creation
- Enterprise development
In summary, grants serve as financial support that does not need to be repaid, aimed at promoting economic growth in targeted areas.
Step 2
Subsidy
Answer
A subsidy is a financial mechanism usually employed by the government to support an economic sector or worker. It typically involves providing assistance to sellers to help reduce the selling price of goods or services, making them more affordable in the market. When the government intervenes in this way, they usually provide sellers with the difference between the selling price and the set economic price. This price support increases the income of the seller and effectively counters the usual taxation impact. Examples of subsidies include:
- Support for agricultural products
- Housing benefits for low-income families
- Education grants to encourage enrollment
Overall, subsidies are designed to encourage the production or accessibility of goods and services that are considered beneficial for society.