THE ROLE OF GOVERNMENT
Having mentioned the effect of government tax policy on the income distribution, it's necessary to examine in greater detail the role of the government in society. In every society governments provide such services as national defence, police, public education, firefighting services, and the administration of justice. In addition, governments through budget make transfer payments to some members of society.
Transfer payments are payments made to individuals without requiring the provision of any service in return. Examples are social security, retirement pensions, unemployment benefits, and, in some countries, food stamps. Government expenditure, whether on the provision of goods and services (defence, police) or on transfer payments, is chiefly financed by imposing taxes, although some (small) residual component may be financed by government borrowing. Tabl. 2 compares the role of the government in four countries.
In each case, we look at four measures of government spending as a percentage of national income: spending on the direct provision of goods and services for the public, transfer payments, interest on the national debt, and total spending.
Italy is a "big-government" country. Its government spending is large and it needs to raise correspondingly large tax revenues. In contrast, Japan has a much smaller government sector and needs to raise correspondingly less tax revenue. These differences in the scale of government activity relative to national income reflect differences in the way different countries allocate their resources among competing uses.
Governments spend part of their revenue on particular goods and services such as tanks, schools and public safety. They directly affect what is produced. Japan's low share of government spending on goods and services. Governments affect for whom output is produced through their tax and transfer payments. By taxing the rich and making transfers to the poor, the government ensures that the
poor are allocated more of what is produced than would otherwise be the case; and the rich get correspondingly less.
The governments also affect how goods are produced, for example through; the regulations it imposes. Managers of factories and mines must obey safety requirements even where these are costly to implement, firms are prevented from freely polluting the atmosphere and rivers, offices and factories are banned in attractive residential parts of the city. The scale of government activities in the modern economy is highly controversial. In the UK the government takes nearly 40 per, cent of national income in taxes. Some governments take a larger share, others a smaller share. Different shares will certainly affect the questions what, how and for whom, but some people believe that a large government sector makes the economy inefficient, reducing the number of goods that can be produced and eventually allocated to consumers.
It's commonly asserted that high tax rates reduce the incentive to work. If halt of all we earn goes to the government, we might prefer to work fewer hours a week and spend more time in the garden or watching TV., That is one possibility, but there is another one: if workers have in mind a target after-tax.. income, e.g. to have at least sufficient to afford a foreign holiday every year, they will have to work more hours to meet this target when taxes are higher. Whether on balance high taxes make people work more or less remains an open question. Welfare payments and unemployment benefit are more likely to reduce incentives to work since they actually contribute to target income. If large-scale government activity leads to important disincentive effects, government activity will affect not. Оnly what, how, and for whom goods are produced, but also how much is produced by the economy as a whole.
Найдите в тексте термины, к данным определениям и переведите их:
* money paid to people without asking for a service in return
* money paid to people when they stop working
* money paid to people who have no work
* money owed by the government of a country
* money received by governments from taxation
* money a worker keeps after paying taxes