A. Dialogue. 1. Read and translate the dialogue in pairs:

1. Read and translate the dialogue in pairs:

Ukrainian: What’s the essence of effective fiscal policy?

Foreigner: You are raising a difficult question. In general, fiscal policy is the policy adopted by a government for raising revenue to meet expenditure.

Ukrainian: Yes, it’s common knowledge that fiscal policy is a powerful tool in the hands of governments, it is a major factor determining macroeconomic performance. Substantial evidence exists, however, that some countries use this tool badly. As a result they have problems of internal and external balance, low growth rates and huge deficits.

Foreigner: You are right, they do. But quite a number of governments seeking to overcome fiscal problems, work to design adequate fiscal policies. They give increasing attention to expenditure priorities and structure of taxation.

Ukrainian: They introduce new taxes, don’t they?

Foreigner: Well, such measures are most unpopular. Governments give emphasis to raising tax elasticity, which enhances the ability of the tax system to generate increases in revenue without resort to new tax measures or rate increases. Countries try to broaden the tax base, reduce tax exemptions, and achieve a simplified and more easily administered tax systems.

Ukrainian: More often than not, however, the budget deficit remains a problem for many countries. How do countries most often reduce the burden deficit?

Foreigner: It all depends on the country’s economic and financial position. In principle, the ways are only too well-known: borrowing from domestic bank and non-bank sources and borrowing from “the rest of the world”, as economics say. Fiscal deficits can be rather easily reduced by countries having well-developed capital markets.

Ukrainian: True, but my feeling is that under fiscal crises, governments, first of all, cut spendings.

Foreigner: Well, yes, some do. But governments seeking to pursue effective fiscal policy do their best to maintain the public deficit at a level consistent with other macroeconomic objectives like controlling inflation, promoting private investment and maintaining external creditworthiness. They work for most effective utilization of scarce government sector resources, for the allocation of resources to achieve growth and equity objectives.

Vocabulary list:

essence – сутність

internal balance – стан внутрішніх рахунків

tax elasticity – еластичність податкової системи

enhance – збільшувати, підвищувати

resort – звернення

to broaden – розширювати податкову базу

tax exemption – звільнення від сплати податків

capital market – ринок довгострокового капіталу

creditworthiness – кредитоздатність

2. Read the dialogue, translate the Ukrainian remarks into English and act it out:

Foreigner: It is true that the structural transformation of Ukrainian economy since 1992 has been accompanied by major changes in the country’s fiscal picture?

Ukrainian: Так, в бюджетно-податковій політиці відбулися значні зміни. Нам довелося значно скоротити державні витрати. Ми приділяємо багато уваги податковому законодавству. Однак існує необхідність більш ефективного управління державним бюджетом.

Foreigner: The market forces in your country emerged faster that your capacity to adjust the budget management practices to new conditions.

Ukrainian: Багато інших країн опинились у схожій ситуації. Нам також доводиться вирішувати різноманітні питання щодо управління державним бюджетом.

Foreigner: I think that neither the national government nor the regional administrations are content with the present pattern of interbudgetary relations. How are you going to resolve the problems?

Ukrainian: Ви підняли дуже важливе питання. Ми намагаємось справедливо та раціонально розподілити обов’язки та повноваження між регіонами та центром. Повертаючись до питання бюджетно-податкової політики та фінансової стабілізації в цілому, хочу підкреслити, що нам необхідно скорочувати бюджетний дефіцит, контролювати інфляцію, заохочувати інвестиційну діяльність, ефективно використовувати наявні ресурси, а також вдосконалювати податкове законодавство.

Foreigner: Doing all this you should remember that the task of the government is to help people who are living below the poverty line, pensioners, invalids, jobless. Benefits that you are now distributing among all should be given to the needy.

3.Make up a dialogue on the following:

Do many countries face fiscal problems? What causes these problems?

1. COMMUNICATIVE SITUATIONS

1. Round-table discussion. Question for discussion:

· Do many countries operate fiscal federalism?

2.Express your attitude to the following:

£ Why have fiscal problems exacerbated in countries in transition?

£ Why is multiyear budgeting practiced in some countries?

£ What are the most desirable features of tax system, according to the recent studies?

3.Prepare a short talk on the following:

What measures should countries seeking to overcome fiscal problems take?

¨READ AND DISCUSS

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