Chapter 16 - Taxation Flashcards
What is taxation?
A levy imposed by government on money earned and spent
What are 3 reasons for taxation?
Redistribution of wealth - social welfare payments
Government revenue
Discouraging consumption
What is direct tax?
Taxes levied on money earned
What is indirect tax?
Taxes levied on money spent
What are taxes paid by h + b? (7)
Vat Motor tax Capital gains tax Customs duty Excise duty Carbon tax PRSI
What is capital gains tax?
Tax paid on money made when selling an asset
What taxes are paid by households only? (6)
PAYE Self assessment tax USC Dirt Local property tax Capital acquisitions tax
What is self assessment tax?
Tax paid by a self employed person on profits made
What is capital acquisitions tax?
Tax on gifts or inheritance 33%
What tax do business pay? (2)
Commercial rates
Corporation tax
What is regressive tax?
When a tax is the same amount for everyone despite how much they earn
What is progressive tax?
Tax that is changed according to income
What is the paye system?
A progressive tax system that means people with a larger income pay more tax after the srcop
What is a tax band?
A range of income that is subject to the standard rate of income tax
What are tax credits?
Reduces the amount of paye tax
What 3 reasons for tax credit?
Single person
Employee tax credit
Home carer tax credit
What is paye modernization?
An initiative to eliminate taxation paperwork through digitizing it.
What are the 3 steps for pay modernization?
Commencing work - employee sets up account with revenue commission when they are set their tax bands/credits
During employment - employees can view how much tax they pay
Ending employment - employer notifies the revenue commissioner so that the commissioner can set new rpns for a new job or so that they can collect social welfare
What are rpns?
Revenue payroll notifications - tax bands/credits set by revenue
What is emergency tax?
Tax paid by employee when employer does not have their ppsn
What are benefits of paye modernization?
S- seamless, simplified M- minimize costs, maximize tax credits A- abolition of forms, automatic review R- right tax, real time reports T- time savings, transparency
What is tax evasion?
An illegal form of avoiding paying tax
What is tax avoidance?
A legal form of avoiding paying tax
What are positive implication of tax for households?
Redistribution of wealth
Improved public service
