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

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The three main classes of central government bodies are (i)
Departments of State, (ii) bodies which are not Departments but
which receive their finances almost entirely from the Exchequer,
are subject to financial control and may be regarded as extensions
of government departments, (iii) various extra-budgetary funds
for which separate accounts are maintained and which are directly
administered by Departments. The dividing line between central
government bodies and other bodies such as public corporations
(Electricity Supply Board) and bodies serving agriculture or
industry (An Foras Taluntais and Coras Trachtala Teoranta) is
difficult to draw exactly, and the inclusion of certain bodies in the
government sector is therefore to a certain extent arbitrary. A full
list of the bodies in (ii) and of extra-budgetary funds in (iii) is
given in Appendix I. An important distinction has to be made
between Departments engaged in administrative, executive and
similar work, which are normally regarded as government activities,
and those engaged in trading activities.
Local Authorities are bodies established for the purpose of having
local jurisdiction over such matters as rates, harbour dues and the
administration of Health Acts. They are also required to make
annual returns of their income and expenditure. The local
authority sector in the accounts presented here includes all these
bodies* whose financial returns are summarised in the Returns of
Local Taxation issued by the Department of Local Government
and also Vocational Education Committees, Harbour Authorities
and County Committees of Agriculture.
Types of Government Financial Transactions
In order to understand the classification of the different types of
government transactions adopted in national accounts it is necessary
to consider the composition of national income and of national
expenditure. National income includes those incomes before deduction
of direct taxation arising from economic activity, received
by individuals, corporations or the government, and includes therefore,
wages, salaries, profits, rent, interest and dividends. It differs
from personal income which is the actual income received by households
from all sources whether from productive activity or not.
Personal income includes social payments such as old age pensions,
unemployment benefit and assistance and also that part of the
interest on central government and local authority debts received
by households. On the other hand personal income excludes the
undistributed profits before tax of public and private companies.
Incomes arising from current production can be described as
factor incomes while other forms of income which cannot be
regarded as payments for current services to production are called
transfer incomes. Transfer incomes include, in the case of households,
the social payments made by the government to households,
which are themselves paid for by another form of transfer income
—the taxes received by the government. Interest and dividends can
be treated in either of two ways. They may be regarded as factor
* The list of bodies is included in Appendix I.