Case Study: My Experience With Tips

The Solution to Budget Deficit

Budget deficits are common occurrence in today’s modern times because most governments cannot sustain the corresponding level of revenues that’s needed in order to support the budgetary requirements. Budgetary requirements will then be brought and dictated on the rising needs and expectations of a country, government and people, which has a responsibility in meeting and servicing them.

With today’s good economic times which is at the stage of business cycle from expansion to peak, a government revenue is at its highest when the private business sector is not capable of paying more taxes from a good business that’s brought about by favorable economic environment. This however is axiomatic because during good times, the government has the tendency to correspond appropriate more expenses with its budget and during at times of increasing its budgetary appropriations in a level that’s more than the increase on its revenues. This would be why a budgetary deficit still occurs.

To recapitulate, a contraction or recession of the economy as reflected in a budget deficit is never solved with the capping of governmental expenses or with the imposition of more taxes upon the taxpayer in raising more revenues. The result with both instances is only prolonging the economic stagnation because there’s no catalysts to rev-up the economy because both of the government and private sectors are holding back on the investments on the case of the government because it is deliberately cutting back on expenses. On the private sector’s side, it has been burdened with more taxes.

The government must consider during fiscal deficits and when the economy is sluggish should embark on an expansionary monetary program to which is designed in propel, shore-up and rev-up economic activities, which will extricate the economy from its current economic problem. Such expansionist monetary policy consist of the government in increasing the level of money supply up to a point that will enable it to expand economic activities through investments of income generating ventures, programs and projects.

This in fact can be accomplished with government borrowing against future taxes by selling long-term bonds and securities to the central bank of which shall issue the corresponding new local money. The new local money that was created is later on going to be used in financing development projects such as the construction and establishment of infrastructure and utilities which is all over the country, which would then catalyze the growth and expansion and also in creating more favorable business and economic climates for private businesses to thrive. With this kind of government assistance and more business opportunities, the private sector will then be able to grow and expand, make more profits, paying more taxes to the government and to employ more people.

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