Summary
Economics summary; Taxation
- Course
- Institution
- Book
typed out summary of IGCSE economics unit 5.2 taxation
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
IGCSE ECONOMICS The Basic Economic Problem.
-
Economics - International specialisation and Trade
-
Economics: Population
Seller
Follow
isalydiafaria
Content preview
IGCSE economics (0455)Unit 5.2 Taxation
Financing public expenditure
Þ As public expenditure rises a government must raise more
revenue to pay for it, can be done by:
Þ Borrowing money from the private sector
Þ Interest payments on government loans to private sector
firms and overseas governments
Þ Taxes on income, wealth, and expenditures
Þ Proceeds from the sales of state-owned entities
The proportion of tax taken from the national income of an
economy measures the total tax burden in that national
economy
Individuals and firms also have personal or corporate tax
burdens measured by the amount of tax they each must pay as
a proportion of their taxes
Tax evasion and avoidance
Þ Taxes are compulsory payments backed by laws. Non-
payment of tax or tax evasion is a punishable offence
Þ Although some taxes can be avoided legally
Þ Taxes can:
Þ raise revenue to fund public expenditure
Þ are used to manage to macroeconomy
Þ can reduce inequalities in income
Þ Can discourage spending on imported goods
Þ Can discourage the consumption of harmful products
Þ Can be used to protect the environment
Þ Should be designed with the following in mind:
1. Equity – taxes should be fair – taxpayers with similar
levels of income must be taxed in a similar way
2. Non-distortionary – taxes used to raise revenue should
not affect or distort sensible economic behavior
, 3. Certainty – tax rates should be relatively stable
4. Convenience
5. Simplicity
6. Administrative efficiency
Tax systems
All taxes in a country
Need to decide if they want a progressive, regressive, or
proportional tax.
Þ Progressive
Þ The proportion of income taken in tax rises as income
rises. People with higher incomes will be taxed more
Þ Regressive
Þ The proportion of income paid in tax falls as income rises
Þ Proportional
Þ Takes the same proportion of income whatever the level
of income
Direct taxes
Þ Are taken directly from individuals or firms and their
incomes. The burden of the tax falls directly on the person
that must be paying it. For example: income taxes, capital
gains tax
Personal income tax
• Is a tax payable from an individual’s earnings usually on a
pay as you go basis
• In many countries tax is levied as progressive tax
• Higher marginal tax rates (the amount of additional tax
paid for every additional dollar earned as income) are
applied to those with higher income
• People earn a certain amount that is tax free (personal
allowance)
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller isalydiafaria. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.81. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79373 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now