Taxes and Public Spending
Governments collect taxes and spend them on services such as health, education, defence and welfare.
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Governments collect taxes and spend them on services such as health, education, defence and welfare.
- Health and welfare are the largest areas
- Budgets plan income and spending
- Deficits are paid by borrowing
🧠 Quick quiz
Three questions. Score 2 or more to complete the topic.
What is Taxes and Public Spending?
Within Economics & Civics, which covers money, markets, business, government, law and citizenship: how societies are organised and run, this topic explains Taxes and Public Spending. Economics and civics topics explain how money, markets, laws and government affect people, so each topic here pairs a clear definition with a model.
Check that you can explain Taxes and Public Spending in your own words and give one example from everyday life. If you can do that, you have understood the core idea.
Understanding Taxes and Public Spending helps you read the news critically and weigh up policies, choices and arguments about society.
Taxes and Public Spending in detail
Governments raise money through taxes, such as income tax, National Insurance, VAT and corporation tax, and through borrowing. They spend it on services and benefits: health, education, pensions and social security, defence, transport and debt interest. The largest items are usually welfare, health and education.
If spending is greater than revenue, the government runs a budget deficit and borrows, adding to the national debt. The annual Budget sets out tax and spending plans. Choices involve trade-offs, such as more spending on health or lower taxes. Fiscal policy, using taxes and spending, aims to influence the economy.
How the interactive helps you understand Taxes and Public Spending
Watch the pie chart in the interactive. Use any sliders or buttons it offers to change the values and see how the pie chart responds.
Before you change anything, predict the result. Then change one value at a time and check whether your prediction was right. This is a quick way to build a correct mental model of Taxes and Public Spending.
Real-life uses and examples
- Explain Taxes and Public Spending to a classmate using a choice you make yourself, such as spending pocket money.
- Give a balanced answer about Taxes and Public Spending by considering more than one point of view.
- Relate Taxes and Public Spending to a news story about prices, jobs, elections or government spending.
Common mistakes to avoid
- Giving an opinion without evidence or a clear economic or civic reason.
- Confusing a short-term effect with a long-term one.
- Learning the definition without testing it. Use the quiz and the interactive to check that you can apply the idea.
Frequently asked questions about Taxes and Public Spending
What is Taxes and Public Spending?
Governments collect taxes and spend them on services such as health, education, defence and welfare.
What are the most important points about Taxes and Public Spending?
The main points are: Health and welfare are the largest areas; Budgets plan income and spending; Deficits are paid by borrowing.
Why is Taxes and Public Spending useful?
Understanding Taxes and Public Spending helps you read the news critically and weigh up policies, choices and arguments about society.
How can I practise Taxes and Public Spending?
Open the interactive at the top of this page and change the controls one at a time. Predict the result before each change, then take the three-question quiz. A score of two or more marks the topic as complete on this device.
Which topics are related to Taxes and Public Spending?
Related topics in Economics & Civics include Pressure Groups and Campaigns, Diversity and Equality, Media Literacy and Fake News.