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.
a) essential- the economic infrastructure
(public transport, telecommunications…)
- services(education, health care, social security...)
- left wing views
- too much regulation bad for business (inefficiency)
- right wing views
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)
Lower inflation – cheaper production
More exports – more money
Higher growth – better standard of living
Social welfare – health, comfort, happiness
responsibilities of the state?
criticise government services?
The leader of Britain's Conservative Party says we're entering a new era…..
Summarize his words.
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
- 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
Cutting taxes →incomes are higher →
demand for more products →
increase of output →
reducing unemployment →
increase in demand →
higher prices → inflation
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
raise revenue to finance government expenditure
encourage capital investment to reducetax bills
dissuade people from smoking, drinking….
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
the resultof hard work
(taxes should be kept as low as possible)
consumptionand reduces capital accumulation
and therefore reduces everyone’s future prosperity
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
perks / benefits - company cars, mobile phones, free health insurance,
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
Explain the difference between tax avoidance and tax evasion.
1. MK: P.113 task 4 and 5
Do a short presentation on taxation (advantages / disadvantages)
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.