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THE ROLE OF GOVERNMENT. u nnecessary laws or enough law s ?. GOVERNMENT ROLE. a) essential - the economic infrastructure (public transport, telecommunications…) - services (education, health care , social security...) - left wing views.

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the role of government

THE ROLE OF GOVERNMENT

unnecessary laws

or

enough laws?

government role
GOVERNMENT ROLE

a) essential- the economic infrastructure

(public transport, telecommunications…)

- services(education, health care, social security...)

- left wing views

slide3
b) restricted- defence, the police, the justice system

- too much regulation bad for business (inefficiency)

- right wing views

areas of responsibility
AREAS OF RESPONSIBILITY
  • Maintenance of a low level of unemployment
  • Price stability (low levels of inflation)
  • High economic growth (GDP)
  • Balance on foreign trade (more exports than imports)
gross domestic product gdp
GROSS DOMESTIC PRODUCTGDP

goods & services produced within a country’s borders

GDP = C + G + I + NX

C = all private consumption/consumer spending

G = government spending

I = investment/ all the country’s business spending on capital

NX = total net exports (total exports minus total imports)

slide6
More jobs - more money

Lower inflation – cheaper production

More exports – more money

Higher growth – better standard of living

Social welfare – health, comfort, happiness

rb p 19
RB: p: 19
  • What areas does Galbraith describe as

responsibilities of the state?

  • What does G. say about the people who

criticise government services?

  • According to G. the market system is not sufficient to guarantee scientific research.

Why?

slide8
http://www.ted.com/talks/lang/eng/david_cameron.html

The leader of Britain's Conservative Party says we're entering a new era…..

Summarize his words.

taxation mackenzie page 112
TAXATION(MacKenzie, page 112)

http://www.youtube.com/watch?v=oi6BQLM4aqo&feature=related

types of taxes
TYPES OF TAXES

1. INCOME TAX– on wages / salaries (progressive / direct)

2. NATIONAL INSURANCE (NI) – for the Job Seekers Allowance, paid

by both the employer and employee

3. VALUE ADDED TAX (VAT) – added to the price of goods and services

4. COUNCIL TAX– charged by local councils

slide11
5. EXCISE DUTIES- a tax on goods such as alcohol, petrol or tobacco

- to discourage spending

6. CORPORATION TAX - on the firm’s profits

7. CAPITAL GAINS TAX (CGT) – on people’s fortunes

8. CAPITAL TRANSFER TAX- on profits made by selling assets

9. INHERITANCE TAX – gifts to family members

10. CUSTOMS– tax when goods are brought in from other countries

business cycle
BUSINESS CYCLE

Cutting taxes →incomes are higher →

demand for more products →

increase of output →

reducing unemployment →

increase in demand →

higher prices → inflation

http www youtube com watch v 1g 2kfrrjgm austerity measures
http://www.youtube.com/watch?v=1g_2kFRrJGM – austerity measures

cutting taxes = increase in government spending

governments cut taxes in a recession

increasetaxes during a boom

introduce austerity measures – An official action taken by a government in order to reduce the amount of money that it spends or the amount that people spend

slide14

a tax / duty on something

  • pay an amount of money in tax / duty / customs
  • collect taxes / duties
  • increase / raise / reduce / cut / taxes
  • impose a tax / duty
  • put a tax on something
  • taxable income / profit / goods
t he function of taxation
THEFUNCTIONOF TAXATION

raise revenue to finance government expenditure

encourage capital investment to reducetax bills

dissuade people from smoking, drinking….

arguments for taxation
ARGUMENTS FOR TAXATION

1. Developing the infrastructure (roads, rails, electricity supply, water supply)

2. Everybody has to contribute toward the support of the government (education, health, culture)

3. Widespread poverty leads to crime

arguments against taxation
ARGUMENTS AGAINST TAXATION
  • The money people earn is their money,

the resultof hard work

(taxes should be kept as low as possible)

  • Taxing savings and capital gains encourages

consumptionand reduces capital accumulation

and therefore reduces everyone’s future prosperity

tax evasion illegal crime
TAX EVASION= illegal = crime

black / underground economy

grey / hidden economy-undeclared jobs

moonlight (moonlighters) - have a second job without paying tax

head offices in tax havens - countries with low taxes

money laundry -drugs, prostitution, people trafficking

through an offshore bank - located in a country with more generous

tax laws

tax avoidance legal
TAX AVOIDANCE = legal

perks / benefits - company cars, mobile phones, free health insurance,

subsidized lunches

tax shelters - postpone the payment of tax

(life insurance policies, pension funds)

tax deductibles – donations to charities

tax loss – when total expenses are greater than total revenues under the tax

reporting rules of the applicable government jurisdiction

slide20
http://www.investopedia.com/video/play/tax-avoidance-vs-tax-evasion#axzz1cI2dsZXmhttp://www.investopedia.com/video/play/tax-avoidance-vs-tax-evasion#axzz1cI2dsZXm

Explain the difference between tax avoidance and tax evasion.

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

group assignment
GROUP ASSIGNMENT

1. MK: P.113 task 4 and 5

Do a short presentation on taxation (advantages / disadvantages)

2. http://www.newyorker.com/talk/financial/2011/07/11/110711ta_talk_surowiecki#ixzz1b2zp85LZ

Read the text “Dodger Mania” and fill in the blanks:

Greece has had to adopt more stringent _____________ plans in order to secure a ___________ from the EU. Greece got in this mess due to

_______________public _____________.Tax ________________is the national pastime.

The “shadow ________________” is larger in Greece than in almost any other European country. ______________ are devoting plenty of time

to hiding their income. To have a ___________ tax system you have to enforce the law. Greek tax ______________were notoriously easy to

bribe. Enforcement of the tax laws loosened in the months leading up to __________________. Even when the system tracked down evaders,

the tax courts took seven to ten years to resolve a case.

Greek citizens are not compliant ________________. Their tax system was riddled with loopholes and exemptions: famous people were given

______________ rates, while shipping tycoons paid no ______________ tax at all and some other professions were legally allowed to

______________ their income. A hefty chunk of the population _______________ on its taxes. If tax ____________ is so common, people trust

the system less, which makes them less willing to pay taxes. Because so many don’t _______________, the government has had to raise

taxes on those who do. Now the Greek government is rationalizing its tax - _________________ system. It has simplified taxes and done away

with some of the ________________. Tax reform will be a ___________order for Greece and the future of the EU may depend on it.

slide22
MAKE A LIST OF THE RED MARKED EXPRESSIONS FROM THE TEXT AND MAKE A SUMMARY ON THE TAX-COLLECTION SYSTEM IN CROATIA.
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http www youtube com watch v 6qqg6ourham feature watch vrec
http://www.youtube.com/watch?v=6qqG6OurHaM&feature=watch-vrechttp://www.youtube.com/watch?v=6qqG6OurHaM&feature=watch-vrec