The Irish Government’s Current Budget Deficit was €11.5 m in December 2010, resulting from Government Current Income of €36.9m and Government Current Spending of €48.4m - Leaving Cert Economics - Question 5 - 2011

Government Current Income Examples:

1. Direct tax revenue, such as income tax collected from individuals and businesses.
2. National lottery receipts collected from lottery ticket sales.

Government Spending Examples:

1. Salaries of all state employees, which cover wages for teachers, police, and public servants.
2. Costs for administering various government departments, including expenses related to running public services.

1. Revenue for Government: The introduction of household water charges can help raise additional income for the state, which can then be used to improve or maintain water services.

2. Evasion Eliminated: Implementing these charges makes it possible to better track and collect payments, thus ensuring that all users contribute fairly towards water supply costs.

1. Household Budgeting: Families will have to adjust their budgets to account for the additional costs of water charges, potentially reducing spending in other areas.

2. Reduced Disposable Income: With an added expense for water, households may find themselves with less disposable income, affecting their ability to spend on other goods and services.

National Debt: National Debt refers to the total cumulative amount of government borrowing outstanding at a given time. It reflects the amount the state owes to external creditors and encompasses obligations arising from past budget deficits.

GDP: GDP stands for Gross Domestic Product, which is the total monetary value of all goods and services produced within a country’s borders over a specific time period.

1. Increased Borrowing for Deficit: The Irish Government has had to borrow more to cover annual budget deficits, resulting from reduced tax revenue and increased public spending.

1. Opportunity Costs: With more funds needed to meet debt obligations, the government has less available for public services and investments that could stimulate economic growth.

2. Increased Burden on Taxpayers: As national debt grows, there may be a need for tax increases or new taxes to meet interest payments, which could discourage consumption and investment.