A tax is a charge levied by a government to raise revenue. The main types of taxes include Income tax – a percentage of income. Corporation tax – a percentage of a firm’s profit. Sales tax/VAT – an indirect tax on the sale of goods. Excise duties – taxes on alcohol, tobacco, petrol. Production taxes …
There are different ways for the government to raise tax revenue. While tax is often unpopular, economists set criteria for what makes a ‘good’ and ‘fair’ tax. This includes – fairness, easy to collect, non-distortionary and increases social welfare. Principles of a good tax include Vertical equity – Fair. Vertical equity is concerned with setting …
Definition of tax tolerance – The amount of tax that a population is willing to tolerate and put up with. In the western world, there are strong political movements to resist higher tax and commit to lower tax rates. The amount of tax a nation is willing to accept depends on many factors. For example, …
A regressive tax is a tax which takes a higher percentage of tax revenue from those on low incomes. As income increases, the proportion of your income paid in tax falls. Suppose there is a poll tax of £3,000 (paid regardless of income) In this case, the person earning £10,000 is paying 30% of their …
A progressive tax takes a higher percentage of tax from people with higher incomes. It means that the more a person earns, the higher his average rate of tax will be. In this case, the person earning £10,000 is paying 20% of their income in tax (total tax of £2,000) The person earning £20,000 is …
Automation and AI have been called the fourth industrial revolution. Robots replacing the jobs of human labour will increase efficiency and enables higher economic growth But, others are concerned that rapid automation can create unequal outcomes, with some losing their job and struggling to gain new forms of employment. A robot tax would, in theory, …
Main types of tax in the UK Income tax – This a tax on people’s income. The basic rate of income tax is 20%, paid on income over the income tax threshold of £10,400. National insurance contributions. Another type of income tax is national insurance contributions, which are based on a similar principle of taking …
Direct taxation is a type of tax which is paid for by an individual directly to the government. It includes poll tax, land tax or income tax. Direct taxation contrasts with an indirect tax, which is imposed on a transaction and paid to the government by the firm after the good has been bought. Indirect …