Grade 10 · CAPS
Grade 10 Public Sector Intervention
Economics practice questions and a worked example
When markets alone don't produce a fair or desirable outcome, government steps in -- through indirect taxes, subsidies, welfare payments such as social grants, and maximum or minimum prices. Grade 10's Public Sector Intervention questions here are grounded in real material: an actual budget-speech extract on VAT and fuel levies, and a real breakdown of what South Africa spends on old-age, disability and child-support grants.
Worked example
Addressing revenue shortfall
The Minister of Finance, in his budget speech, has had to make a "difficult decision" to address a revenue shortfall and to fund fee-free education.
The main tax proposals for the 2018 budget are: an increase in Value Added Tax (VAT) from 14% to 15%; an increase in the ad-valorem excise duty rate on luxury goods from 7% to 9%; a higher estate duty tax rate of 25% for estates greater than R30 million in value; a 52 cents per litre increase in fuel levies (made up of a 22 cents per litre general fuel levy and a 30 cents per litre increase in the Road Accident Fund levy); and increases in alcohol and tobacco excise duties of between 6% and 10%.
We have also made strides in improving access to education over the past five years. The national school nutrition programme now feeds 8.7 million children. The Funza Lushaka bursary scheme supported 3 950 graduates qualifying for placement as teachers in 2013.
(Adapted from Budget Speech 2018/2019)
2.3.2 What were the reasons for the Minister to make a harsh decision?
Answer & explanation
The minister wanted to increase the state revenue, wanted to fund the free tertiary education, and to improve the welfare of the South African citizens.
1. The Minister of Finance faced a revenue shortfall, meaning the government needed more money to cover its expenses.
2. To address this, the Minister proposed tax increases, such as raising VAT and excise duties, to boost state revenue.
3. One of the key reasons for this decision was to fund fee-free tertiary education, ensuring more students can access higher education without financial barriers.
4. Additionally, the decision aimed to improve the welfare of South African citizens by supporting programs like the national school nutrition program and bursary schemes.
5. These measures were necessary to maintain and improve public services and welfare initiatives.
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Question 1 of 3
1.1.4 Public sector is divided into how many level/s?
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More practice questions
Explore additional Grade 10 Public Sector Intervention questions.
- 2Addressing revenue shortfall The Minister of Finance, in his budget speech, has had to make a "difficult decision" to address a revenue shortfall and to fund fee-free education. The main tax proposals for the 2018 budget are: an increase in Value Added Tax (VAT) from 14% to 15%; an increase in the ad-valorem excise duty rate on luxury goods from 7% to 9%; a higher estate duty tax rate of 25% for estates greater than R30 million in value; a 52 cents per litre increase in fuel levies (made up of a 22 cents per litre general fuel levy and a 30 cents per litre increase in the Road Accident Fund levy); and increases in alcohol and tobacco excise duties of between 6% and 10%. We have also made strides in improving access to education over the past five years. The national school nutrition programme now feeds 8.7 million children. The Funza Lushaka bursary scheme supported 3 950 graduates qualifying for placement as teachers in 2013. (Adapted from Budget Speech 2018/2019) 2.3.1 Identify any TWO indirect taxes from the extract.
- 3Addressing revenue shortfall The Minister of Finance, in his budget speech, has had to make a "difficult decision" to address a revenue shortfall and to fund fee-free education. The main tax proposals for the 2018 budget are: an increase in Value Added Tax (VAT) from 14% to 15%; an increase in the ad-valorem excise duty rate on luxury goods from 7% to 9%; a higher estate duty tax rate of 25% for estates greater than R30 million in value; a 52 cents per litre increase in fuel levies (made up of a 22 cents per litre general fuel levy and a 30 cents per litre increase in the Road Accident Fund levy); and increases in alcohol and tobacco excise duties of between 6% and 10%. We have also made strides in improving access to education over the past five years. The national school nutrition programme now feeds 8.7 million children. The Funza Lushaka bursary scheme supported 3 950 graduates qualifying for placement as teachers in 2013. (Adapted from Budget Speech 2018/2019) 2.3.3 How will the Funza Lushaka graduates improve state revenue?
- 45 Without using graphs, discuss in detail the following methods of government involvement in the economy: Production subsidy, Maximum prices, Welfare. Outline FIVE reasons why the government should be involved in the economy.
- 51.1.4 Which one of the following is known as social wage? A an income B a welfare payment C a benefit D a reward
Common mistakes
- Confusing a maximum price (a ceiling below equilibrium, set to help consumers, which can cause a shortage) with a minimum price (a floor above equilibrium, set to help producers, which can cause a surplus). Learners also sometimes list a subsidy as a type of tax rather than the opposite -- a payment from government to reduce a producer's costs.
More Grade 10 Economics topics
Aligned to CAPS Grade 10 Economics — Public Sector Intervention. Curriculum source: CAPS for the FET Phase, Department of Basic Education.
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