8. (a) Explain any three of the following: - Current Budget Deficit; - Progressive Tax; - Nationalisation; - Economic recession - Leaving Cert Economics - Question 8 - 2012

A Progressive Tax is a taxation system where the tax rate increases as the taxable amount increases. This means higher earners pay a larger percentage of their income in taxes, which can help reduce income inequality.

An Economic Recession is defined as a decline in GDP that persists for two or more consecutive quarters. It often results in higher unemployment, lower consumer spending, and overall economic slowdown.

1. VAT: Value Added Tax (VAT) is a type of indirect tax applied to goods and services, calculated on the value added at each stage of production or distribution, often affecting consumer prices.

2. Carbon Tax: A Carbon Tax is an environmental tax imposed on the carbon content of fuels, aimed at reducing carbon emissions and promoting cleaner energy sources.

3. Household Charge: The Household Charge is an annual fee levied on residential properties to generate revenue for local services.

The increased VAT can lead to higher prices on goods and services, effectively decreasing disposable income for households. Consumers may reduce spending or change their purchasing habits to adjust for the increased costs.

As VAT rises, retailers may see a drop in sales as consumers cut back on spending. This could lead to reduced workforce levels as businesses look to minimize costs, potentially resulting in job losses.

If the VAT increase leads to reduced consumption, the Government's tax revenue may initially fall, exacerbating the Current Budget Deficit. However, in the long run, the increase in tax rates could stabilize or improve revenue streams.

NTMA stands for the National Treasury Management Agency, which is responsible for the management of Ireland's National Debt.

National Debt refers to the total amount of money that a country's government has borrowed, which is outstanding and owed to external creditors. This includes all government borrowings that are used to fund the public sector.

1. Opportunity Costs: High levels of National Debt mean that a larger portion of tax revenues must be allocated to interest payments instead of public services, potentially reducing investment in areas such as healthcare and education.

2. Increased Burden on Taxpayers: The requirement to service debt can lead to increased taxes, impacting disposable income and overall living standards for citizens. Higher taxes may also deter economic growth.