public finance

Answer THREE of the following (from 6)
5] “Bagehot” (2020) describes aspects of the devolution of power to provinces in the UK. Discuss an economic model for the decentralisation of government with particular focus on the provision of local public goods. Analyse the commentary from the article in relation to the model’s predictions as to what services and finances are well suited to provision at the local level compared to the national level.
Bagehot: Andy Burnham strengthens the case for devolution in Britain. (2020, September 26). The Economist. https://www.economist.com/britain/2020/09/24/andy-burnham-strengthens-the-case- for-devolution-in-britain
6] “Economics focus” (2010) discusses a recommendation that VAT in the UK should be changed to charge a single rate without exemptions. Explain the trade-off between efficiency and equity in the use of taxes on goods and services to raise government revenue. Asses the claims in the article regarding how the removal of current exemptions and reduced ratings in the VAT system need not be regressive.
Economics focus: Tax from scratch. (2010, November 13). The Economist. https://www.economist.com/finance-and-economics/2010/11/11/tax-from-scratch
7] “When duty falls” (2022) describes a 5 pence cut to the rate of fuel duty for a period one year applied in the UK. Reproduce a model of tax incidence that illustrates how the impact on consumers and suppliers from a reduction in the tax rate will vary with different market conditions. Assess the advantages and disadvantages of this policy in relation to the alternatives suggested in the article.
When duty falls: Cutting fuel taxes is a bad idea. (2022, March 26). The Economist. https://www.economist.com/leaders/2022/03/26/cutting-fuel-taxes-is-a-bad-idea
8] “Extra credit” (2018) discusses the Earned Income Tax Credit (EITC) – a tax benefit in the USA that tops up the incomes of low earners. Explain with the use of an appropriate economic model how the EITC may increase labour supply among some workers but have an ambiguous effect on other workers. Assess the impact of the different thresholds (relating to maximum payment and the start of withdrawal) within the EITC system on labour supply.
Extra credit: The Earned Income Tax Credit almost pays for itself. (2018, November 24). The Economist. https://www.economist.com/united-states/2018/11/24/the-earned-income-tax-credit- almost-pays-for-itself
9] “Biden’s taxing problem” (2021) describes aspects of plans to change taxes on capital returns in the USA. Arrange different arguments against the taxation of capital returns. Discuss various arguments in favour of the taxation of capital returns. Analyse the suggestion in the article of exempting “normal” returns on capital from taxation while taxing “excess” returns.
Biden’s taxing problem: How to tax capital without hurting investment. (2021, May 1). The Economist. https://www.economist.com/leaders/2021/04/29/how-to-tax-capital-without-hurting- investment
10] “The World Ahead” (2021) details several challenges for the BBC, one of the UK’s public service broadcasters – which is primarily funded by the licence fee, an annual charge on households watching TV. Explain the economic reasons for government intervention in the provision of television services through the BBC and analyse the effects of the licence fee. Assess the role of technological change on the arguments for intervention.
The World Ahead 2022: In its centenary year, the BBC looks vulnerable. (2021, November 8). The Economist. https://www.economist.com/the-world-ahead/2021/11/08/in-its-centenary-year-the- bbc-looks-vulnerable