The tables below show the expected revenues and projected expenditures from the budget of a hypothetical country in 1998. Use the information in the tables to answer the questions that follow. EXPECTED REVENUE
PROJECTED EXPENDITURE
(a) Calculate the total revenue from
(i) direct taxes [3 marks]
(ii) indirect taxes [3 marks]
(iii) non-tax sources [3 marks]
(b) Determine the total
(i) capital expenditure [3 marks]
(ii) recurrent expenditure [3 marks]
(c) Determine whether the budget is a surplus or deficit. [5 marks]
| ITEM | AMOUNT ($ millions) |
| Rents, royalties and profits | 75.00 |
| Company income tax | 150.00 |
| Customs and excise duties | 300.20 |
| Personal income tax | 80.00 |
| Fees specific charges | 60.80 |
| Value added tax | 100.00 |
PROJECTED EXPENDITURE
| ITEM | AMOUNT ($ millions) |
| General administration | 220.10 |
| Maintenance of foreign missions | 50.00 |
| Transfer payments | 65.00 |
| Building of schools and hospitals | 200.00 |
| Road construction | 180.90 |
(a) Calculate the total revenue from
(i) direct taxes [3 marks]
(ii) indirect taxes [3 marks]
(iii) non-tax sources [3 marks]
(b) Determine the total
(i) capital expenditure [3 marks]
(ii) recurrent expenditure [3 marks]
(c) Determine whether the budget is a surplus or deficit. [5 marks]
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Correct Answer: Option n
Explanation:
(a)(i) Direct taxes: Company income tax 150.00
Personal income tax \(\frac{ 80.00}{230.00}\)
(ii) Indirect taxes: Customs & Excise duties 300.20
Value Added Tax \(\frac{ 100.00}{400.20}\)
(iii) Revenue from non-tax sources:
Rent, Royalties and Profits 75.00
Fees and specific charges \(\frac{ 60.80}{135.80}\)
(b)(i) Capital expenditure:
Building of schools and hospitals 200.00
Road construction \(\frac{ 180.90}{380.90}\)
(ii) Recurrent expenditure:
General administration 220.10
Maintenance of foreign missions 50.00
Transfer payments \(\frac{ 65.00}{335.10}\)
(c) Total revenue $766.00 million
Total expenditure $716.00 million
Surplus $766 - $716 = $50 million
The budget is a surplus because total revenue exceeds the total expenditure.
(a)(i) Direct taxes: Company income tax 150.00
Personal income tax \(\frac{ 80.00}{230.00}\)
(ii) Indirect taxes: Customs & Excise duties 300.20
Value Added Tax \(\frac{ 100.00}{400.20}\)
(iii) Revenue from non-tax sources:
Rent, Royalties and Profits 75.00
Fees and specific charges \(\frac{ 60.80}{135.80}\)
(b)(i) Capital expenditure:
Building of schools and hospitals 200.00
Road construction \(\frac{ 180.90}{380.90}\)
(ii) Recurrent expenditure:
General administration 220.10
Maintenance of foreign missions 50.00
Transfer payments \(\frac{ 65.00}{335.10}\)
(c) Total revenue $766.00 million
Total expenditure $716.00 million
Surplus $766 - $716 = $50 million
The budget is a surplus because total revenue exceeds the total expenditure.