Chapter 16 - Taxation

Question 1

What is taxation?

Answer 1

A levy imposed by government on money earned and spent

Question 2

What are 3 reasons for taxation?

Answer 2

Redistribution of wealth - social welfare payments
Government revenue
Discouraging consumption

Question 3

What is direct tax?

Answer 3

Taxes levied on money earned

Question 4

What is indirect tax?

Answer 4

Taxes levied on money spent

Question 5

What are taxes paid by h + b? (7)

Answer 5

Vat
Motor tax
Capital gains tax
Customs duty
Excise duty
Carbon tax
PRSI

Question 6

What is capital gains tax?

Answer 6

Tax paid on money made when selling an asset

Question 7

What taxes are paid by households only? (6)

Answer 7

PAYE 
Self assessment tax
USC
Dirt
Local property tax
Capital acquisitions tax

Question 8

What is self assessment tax?

Answer 8

Tax paid by a self employed person on profits made

Question 9

What is capital acquisitions tax?

Answer 9

Tax on gifts or inheritance 33%

Question 10

What tax do business pay? (2)

Answer 10

Commercial rates

Corporation tax

Question 11

What is regressive tax?

Answer 11

When a tax is the same amount for everyone despite how much they earn

Question 12

What is progressive tax?

Answer 12

Tax that is changed according to income

Question 13

What is the paye system?

Answer 13

A progressive tax system that means people with a larger income pay more tax after the srcop

Question 14

What is a tax band?

Answer 14

A range of income that is subject to the standard rate of income tax

Question 15

What are tax credits?

Answer 15

Reduces the amount of paye tax

Question 16

What 3 reasons for tax credit?

Answer 16

Single person
Employee tax credit
Home carer tax credit

Question 17

What is paye modernization?

Answer 17

An initiative to eliminate taxation paperwork through digitizing it.

Question 18

What are the 3 steps for pay modernization?

Answer 18

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

Question 19

What are rpns?

Answer 19

Revenue payroll notifications - tax bands/credits set by revenue

Question 20

What is emergency tax?

Answer 20

Tax paid by employee when employer does not have their ppsn

Question 21

What are benefits of paye modernization?

Answer 21

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

Question 22

What is tax evasion?

Answer 22

An illegal form of avoiding paying tax

Question 23

What is tax avoidance?

Answer 23

A legal form of avoiding paying tax

Question 24

What are positive implication of tax for households?

Answer 24

Redistribution of wealth

Improved public service

Question 25

What are negative implications of tax for households?

Answer 25

Reduces income
Higher prices
Regressive taxes

Question 26

What are positive implication of tax for business?

Answer 26

Tax incentives

Lower rate of corporation tax

Question 27

What are negative implications of tax for business?

Answer 27

Overtime
Employers PRSI
Discourages enterprise

Question 28

What is depreciation of assets?

Answer 28

When an asset loses value