Identify the budget type.

Right KIMBE, let's go. a) Step 1: Identify the budget type. From Table 3, the "Budget Position (Deficit/Surplus)" for all three years (2024, 2025, 2026) shows negative values (-K3.4b, -K2.6b, -K3.2b). This indicates a budget deficit for all three years. Step 2: Calculate the average annual deficit. The deficits are K3.4 billion, K2.6 billion, and K3.2 billion. Average annual deficit = K3.4b + K2.6b + K3.2b3 Average annual deficit = K9.2b3 Average annual deficit = K3.067b The PNG government has run a budget deficit in all three years. The average annual deficit across the three years is K3.067 billion. Budget Deficit, Average Annual Deficit: K3.067 billion b) i) What type of tax is this? Justify. Based on Table 4, as annual taxable income increases, the tax rate also increases (from 0% to 40%). This is a progressive tax system. Justification: A progressive tax system means that individuals with higher incomes pay a larger percentage of their income in taxes compared to those with lower incomes. ii) Why is this type of tax considered fairer than a flat-rate tax? A progressive tax is considered fairer because it aligns with the ability-to-pay principle. Those with higher incomes are deemed to have a greater capacity to contribute to public services without significantly impacting their basic living standards, thus promoting greater income equality. A flat-rate tax, while simple, takes the same percentage from everyone, which can disproportionately burden lower-income individuals. c) Step 1: Identify one economic risk of rising public debt as a percentage of GDP. A rising public debt as a percentage of GDP can lead to increased interest payments on the debt, which diverts government funds away from essential public services or investments. Step 2: Suggest one fiscal policy action. One fiscal policy action the PNG government could take is to reduce government expenditure (e.g., by cutting spending on non-essential projects or improving efficiency) to decrease the budget deficit and slow the growth of public debt. Risk: Increased interest payments. Action: Reduce government expenditure. Send me the next one 📸