An Analysis of Government Revenue and Expenditure in ... - TARA

149
years to mounting costs of administration without any clear
definition as to what constitutes costs of administration. Net
expenditure by public authorities may, however, be described as the
costs of administration and the provision of social and community
services such as health, roads, education, etc. From the figures in
Table 1 it is clear that the main reason for increased government
expenditure in recent years is not increasing costs of administration
but greatly increased transfer payments.
The surplus on public authorities' current account after deduction
of taxes on capital rose from £8*9 million in 1953/54 to
£14-6 million in 1958/59, before allowance for depreciation. It is
reasonable to infer from the high level of public authorities' gross
fixed asset formation in recent years that the depreciation of assets
owned by public authorities is considerable and would probably
have the effect of eliminating the surplus on current account except
for the two most recent years. These recent surpluses and the fact
that the greater part of the national debt interest is covered by
receipts of investment income lead to the conclusion that the
financial position of the public authorities is sound. Nevertheless,
there should be no undue optimism about the future. Expenditure
on capital transfer payments, which has been about £8-£9 million a
year recently, does not provide a future monetary return to the
public authorities, although the expenditure should benefit the
economy as a whole. If such expenditure should rise markedly,
the interest on future national debt could not be adequately
covered by investment income without having a large surplus on
current account.
Expenditure on gross physical capital formation has decreased
since 1956/57, while borrowing has also fallen significantly from
the very high level of 1956/57.
The pattern of the changes in public authorities' current receipts
and expenditure is indicated in Table 6, which shows the percentage
distribution of public authorities' current receipts and expenditure
in each year.
The proportion of current receipts arising from taxes on income
and social insurance contributions declined each year from 1955/56
to 1958/59, while the proportion from taxes on expenditure increased
from 61-7 per cent, in 1955/56 to 64-2 per cent, in 1958/59.
On the expenditure side the table shows that national debt
interest (including land bond interest) has risen from 8*9 per cent
of total expenditure in 1953/54 to 11*5 per cent, in 1958/59. At the
same time other transfer payments have increased from 30-3 per
cent, to 31*7 per cent, while net current expenditure on goods and
services decreased from 49*0 per cent, to 46*0 per cent.
International Comparisons
Table 7 shows the current receipts and expenditure of public
authorities for a number of countries. The figures for Ireland
included in this table are somewhat different from those shown in
earlier tables. Certain adjustments have been made to the figures
in order to make them as comparable as possible with OEEC
concepts. In particular a conjectural figure for the depreciation