Governtment Income & Expenditure Flashcards
Sectors the government spends on
Social security Health Education Debt interest Defence Law and order
What does the government have to do raise revenue
Increase taxes
Benefit of direct tax
They help reduce inequalities in income and make distribution fairer
Cost of direct taxes
They harm incentives for workers to do over time or get a promotion
Benefits of indirect taxes
Only pay for it if you choose to buy it
Reduce demand on certain goods
Cost of indirect tax
Can increase inequalities and be unfair on lower income groups
Why is there an uneven distribution of income
The total income in a whole country is not shared out equally
Factors that cause an uneven distribution of income
Wages- high demand for some jobs
Other incomes- some rely on state and some have assets
What is the aim of redistribution of income
To reduce inequalities of income between individuals and households
What is the tax free allowance
£10,600
Who gets the tax free allowance
Everyone that earns an income
What do direct taxes tend to be
Progressive or proportional
What type of tax is vat
Regressive because it isn’t based on people’s income
What type of tax is excise duty
Regressive
What goods are not included in vat
Groceries
Books
Medicine
