Does the government spend taxpayers’ money wisely?

Every year, millions of taxpayers promptly pay up income tax as mandated by the Government of New Zealand. Taxpayers cough up billions of dollars in taxes, filling up the government coffers and hoping that their hard earned money is wisely spent on public services that will enhance their quality of life in the years to come. Governments spend taxpayers’ money on a wide range of programmes from education to defence and from welfare to infrastructure. Yet economists believe that some part of the government spending is very wasteful. How can we ensure that taxpayers are getting value for money? “What does the Government do with our money?” is a question on everyone’s minds. Governments across the world spend taxpayer’s money on medicare, social security, securing the country against war, repairing roads and bridges, educational purposes and of course, pensions. Following the global financial crisis, many economies are spending huge amounts of taxpayers’ money on stabilising the financial system and boosting the economy to spur employment and prodding industrial growth to prevent the country from sliding into recession. The government pays for this spending by collecting many types of revenue. Income taxes are the largest source of revenue, with payroll taxes following a close second. Did you know that most taxpayers pay more in payroll taxes than in income taxes? Business taxes, excise taxes, tariffs, and income from government activities also contribute to the Government’s kitty. While many feel that taxpayers’ monies are well spent, few blame the Government for increasingly favouring certain “pet projects” such as defence contracts and other government initiatives that fail to have any noticeable effect on the country’s economy. In recent times, much of the taxpayers’ funds have been used for bailout of sick and drowning public sector entities. Experts agree that these funds could have instead been used to stimulate the economy in hard times. In addition, the Government could have used these funds to regulate the business and financial sectors. Governments promise many unfunded benefits to future generations in their popularity drive; however, this could have a disastrous effect on the economy by increasing national debt and unfunded liabilities. It takes judicious financial discipline in the hands of the Government to take a tough stance and cut unnecessary populist programmes, raise taxes and tighten its purse strings on unwanted spending. The need of the hour is funds being spent on much-needed industrial revival, education programmes, economic sustainability, environmental protection and green energy technologies. Only then will taxpayers feel that their hard-earned money is being put to use and trust the Government to act wisely and responsibly.


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