Chapter 10: Personal Taxation Flashcards
What is Tax?
Tax is a compulsory payment to the government, charged on income, business profits or added to the cost of goods and services.
WHY PAY TAXES?
Essential Public Services
Governments use tax revenue (income) to fund essential public services, which benefit the community. Examples include health, education and public transport systems as well as a range of recreational amenities such as parks, playgrounds and swimming pools.
Equal Distribution of Wealth
The government uses taxes to help make sure there is a more equal distribution of wealth within the economy. People who earn more should pay more tax.
Control
The government may use taxes to promote or discourage certain activities. For example, lower taxation levels can help to increase consumer spending and job creation, whereas increased tax on cigarettes and plastic bags may reduce their consumption.
What’s A direct tax ?
A direct tax is paid on income as it is earned. It is paid by the person on whom it is imposed (levied), e.g. PAYE.
What’s Indirect taxes ?
Indirect taxes are paid on income as it is spent, e.g. VAT.
Taxes which take a higher percentage of income from low income earners are said to be
What are progressive taxes?
A progressive tax is one where the tax rate increases as income increases, so the more you earn, the more you pay.
Self-assessed income tax?
Self-assessed income tax: This is paid by those who are self-employed. The taxpayer calculates the relevant tax payment themselves.
What’s Universal Social Charge (USC):?
Universal Social Charge (USC): Incomes over a certain amount are subject to USC, at different rates for different levels of income. USC is in addition to income tax.
Custom duties:?
Custom duties: This is a tax on goods imported into Ireland from outside the EU.
What agency is responsible for for tax collection in Ireland?
The Office of the Revenue Commissioners (Revenue for short) is the State agency responsible for tax collection In Ireland.
