Question 9.

Taxes in million 1997 2001 2007 2011 Taxes on production and imports Current taxes on income, wealth, etc. Capital taxes Social Security contributions Total 106,865 124,536 1,601 55,007 288,009 132,154 169,463 2,396 70,089 374,102 175,466 231,968 3,867 107,688 518,989 201,364 237,635 2,906 118,031 559,936 1997 2001 2007 2011 Population (thousands) GDP (million ) GDP deflator Source: OECD Stat 2013 58,314 835,635 77.64 59,113 1,019,838 82.73 60,986 1,412,119 95.79 62,735 1,515,828 105.17 9. The following table shows the composition of UK tax revenues in 1997, 2001, 2007, and 2011. a. Using the information provided in Question 8, for the periods 1997 to 2001 and 2007 to 2011, calculate the absolute change in tax revenues, the change in tax revenues in real (i.e., inflation-adjusted) terms, and the change in real tax revenues per capita. b. Which components of tax had the largest rela- tive increases from 1997 to 2001 and from 2007 to 2011? Which had the largest relative decreases? 1997 2011 Defense Public order Health Education Social protection Other Total Source: OECD Stat 2013 2,300,700 1,729,700 4,481,300 3,824,600 13,000,000 8,008,900 33,626,900 Government expenditures in million & 2001 2007 2,341,300 3,249,800 2,314,000 3,545,400 6,030,500 9,964,600 5,370,200 8,653,800 16,000,000 22,000,000 9,465,600 15,000,000 41,034,000 61,711,600 3,774,800 3,884,800 12,000,000 9,872,600 27,000,000 17,000,000 73,644,500