Expenditure And Revenue In United Kingdom -Myassignmenthelp.Com

Question: Discuss About The Expenditure And Revenue In United Kingdom? Answer: Introducation The primary concern would be related to the individuals involved in financing the pay-as-you-go system. When the rates for employees and employers are increased, it becomes difficult for the employees of this generation to maintain affordable standard of living. As a result, it poses burden on the employers to match, which increases their overall expenses (Boyer, Ross Winter, 2017). The growth in population and the growth in wage rate help in ascertaining the growth rate related to the contribution base. This would result in increased layoffs or seasonal workings with the rise in contributions, instead of offering fulltime positions throughout the year. In addition, there is absence of any guarantee that every individual would receive public pension in the future. This compels the individuals to think that they would not have adequate money to live on in future. Furthermore, this would management these individuals to take early retirement and they are removed from the labour force and extra years for receiving the benefit and limited years for contribution. The initiation of the private pooled pension system does not signify that all individuals could participate in the same, even if the contribution is matched on the part of the employer. This is identical in case of RRSP system. An individual could obtain a tax break on both the systems at a level of payroll deduction (De Grauwe, 2016). However, in case; the funds are vested in the form of pension plan, they need to wait until retirement for accessing the funds. If there is no restriction of the funds in RRSP system, the individuals have the chance of obtaining the funds less income tax applicable; however, these funds would not be available in future. They are identical because they are government saving plan, in which tax break could be obtained in the initial stage; however, there is no guarantee regarding the availability of RRSP at the time of retirement. This depends on the occurrence of the withdrawal and the way of selecting to vest RRSP. On the other hand, private pension would be available mostly at the time of retirement, if it is necessary for the individuals to participate along with satisfying all requirements (Stiglitz Rosengard, 2015). The various programs of social assistance offered on the federal government of Canada constitute of the following: Working Income Tax Benefit (WITB): This benefit is offered to the working individuals having lower income and the intention is to strengthen the participation of the labour force. Canada Child Tax Benefit (CCTB): This benefit is offered to the families having children with low income. National Child Benefit Supplement (NCBS): This benefit is provided as part of CCTB to the low income families with children. Canada Assistance Plan (CAP): This benefit offers open-ended matching grants to the province constituting of 50% on eligible expenses on social welfare (Borisova et al., 2015). Canada Social Transfer (CST): This benefit is offered to the province on an identical per capita cash grant related post-secondary education and social programs. Particulars Details Amount (in $) Welfare benefits (A) Provided 1,121 Income on working hours (B) (40 hours x $15) 600 Reduced benefits (C) $0.35 ($15 x 40) 210 Total income (D) (A) + (B) - (C) 1,511 For mitigating the increasing costs, the Canadian government could go back for charging a greater monthly amount from the families, instead of a single individual. The accounting earned could be provided in the form of subsidy to the low-income individuals and households (Innis, 2017).This could be taxable benefit and it would raise the amount gathered for personal income tax. Abusers are present in the healthcare system of Canada in case of situations, which are not necessary. They need to charge user fee for enabling in covering the service costs and it might slow down few individuals, who do not have to visit the doctors for minor cases. Many employers offer extensive healthcare premiums, which are taxable; in case, the payment is made on the part of the employer. This would result in increasing personal income tax. The prescription cost could be minimised; in case, the pharmacies and doctors are involved in using generic names rather than brand names. Another issue is related to obesity and smoking. The services could be offered at an affordable cost for enabling in controlling obesity along with prohibiting smoking (King, 2016). Particulars Details Units Probability of accident for Jermaine A 7.50% Insurance amount of Jermaine B $ 1,000,000 Probability of accident for Janet C 1% Insurance amount of Janet D $ 500,000 Expected payout (A*B) + (C*D) $ 80,000 The main issue related to adverse selection is that the individuals not employed and looking for jobs need to apply for employment insurance. The individuals unemployed for greater duration and multiple times are those having demand for employment insurance. The issue pertaining to moral hazard is the laid off individuals, which could be categorised as either seasonal or temporary workers. The employers utilise the situation to their benefits by laying off the workers or they minimise their labour hours for their personal benefits. However, it is necessary for the employees to supplement their income, even though it is partial and thus, they apply for employment insurance. As a result, the employees obtain temporary relief; however, the employers utilise it to their benefits for analysing the amount of incentive for steering those individuals out of employment insurance along with searching for additional employment. The numerous flows affecting the rate of unemployment are the individuals employed, unemployed and those not present in the labour force. The level of the following criteria is dependent on the rate of unemployment: The laid off individuals or those who have left their jobs look to search for employment The individuals unemployed previously find reasonable job offers for employment The individuals leaving the labour force The individuals who enter or return to the workforce in search of employment (Sandford, 2015) The above criteria would enable in obtaining an insight of the reasons related to unemployment for enabling policies to be frame in order to minimise the rate of unemployment. Particulars Details Units Salary of the economist A $ 49,939 Provided rate B 9.90% Yearly basic exemption C $ 3,500 Payment in CPP contributions B*(A-C) $ 4,597.46 Due to the declining rates related to productivity growth and slower growth rate in employment, there had been a fall in the growth rate of salaries and wages in contrast to the real interest rate since 1980s. There are four factors, which resulted in such change and these are represented briefly as follows: The first factor is demography, in which the birth rate was low in 1960s and there is life expectancy at the age of 65, alive longer (Skousen, 2016). The second factor is change in economics, in which there is decline in the growth rate of productivity and rise in the pay-as-you-go rate than projected. The increase in the pay-as-you-go rate is due to the enhancements of the benefits related to CPP as well, which is the third factor. The final factor is the rise in disability claims. All the above-stated factors signify the implications for the raised rate of the pay-as-you-go system, due to which there had been a reform in the CPP program in 1998. References: Borisova, G., Fotak, V., Holland, K., Megginson, W. L. (2015). Government ownership and the cost of debt: Evidence from government investments in publicly traded firms.Journal of Financial Economics,118(1), 168-191. Boyer, M., Ross, T. W., Winter, R. A. (2017). The rise of economics in competition policy: A Canadian perspective.Canadian Journal of Economics. De Grauwe, P. (2016).Economics of monetary union. Oxford university press. Innis, H. A. (2017).Essays in Canadian economic history. University of Toronto Press. King, D. (2016).Fiscal tiers: The economics of multi-level government. Routledge. Sandford, C. T. (2015).Economics of public finance: an economic analysis of government expenditure and revenue in the United Kingdom. Elsevier. Skousen, M. (2016).The making of modern economics: the lives and ideas of the great thinkers. Routledge. Stiglitz, J. E., Rosengard, J. K. (2015).Economics of the Public Sector: Fourth International Student Edition. WW Norton Company.