The UK fiscal policy.

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Alleyn and Viny

                                        (Wang xiao yang)             (Liu xing)

                                    CN:        GZ-02-029            GZ-02-0

Instructor          David

2003 June 30th 

Table of contains

1                                                 Abstract

1                     Introduction

2                                        Result and analysis

2                          Taxation

2               The direct tax

4        The indirect tax

4        Government spending

5        Recommendation and conclusion

6        References


Fiscal policy was relatively popular during the 1940s and 1970s. Generally, it is the use of taxation and government spending to manage the economy. In the UK today, the rate of direct taxes have been brought down over the past two decades, though the field was paradoxically increased, and there is a shift of the balance of taxation from direct tax to indirect tax. Also, the government spending has been increasing, which is well illustrated by the increasing PSBR (public sector borrowing requirement). Generally, the main reason of these changes will be shown in the paper. Generally, government usually has conflicting objectives be using the fiscal policy. For example, keeping balance of payment equilibrium may suppress the proper economic growth. Also, there may become technical problems. As a result, fiscal needs adjusting.


The fiscal policy was widely used by government in many different countries around the world, during the 1940s and 1970s. And now it is a main tool of UK to react to rhea economic problems in UK. The fiscal policy is the use of government spending and taxation to manage the economy. It is an essential and efficient measure by government to solve some kinds of problems that caused by the economic fluctuation. Usually it impacts the aggregate demanded to influence the whole economic market. Now in Britain, fiscal policy can be used in various different ways. It should be used to try to boost the level of aggregate demand when the economy is in recession. In this case it is called as deflationary policy. Alternatively the needs the deflationary policy, and the fiscal policy can also be used to affect the supply side.

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According to the research on the react fiscal policy of the UK, with emphasis on taxation, the current trend of a shift in the balance of taxation can be identified. Notably, the direction is from the direct tax to the indirect tax. Also, the increasing government spending and proportional change are also found out. Besides, whether the tax revenue can compensate the government spending is also examined.

In this paper we report the results of an analysis of the direct/indirect taxes and the trends for them and for the government spending. The related factors of fiscal policy we ...

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