Purpose Of Taxation Flashcards
What is tax?
Tax is a compulsory payment to the government charged on income, business profits or added to the price of goods and services
What are the principles of a fair tax system?
Equality, certainty, economy and convenience are the principles of a fair tax system
What may happen is income taxes are on high?
People may decide that it is not worthwhile as the revenue takes too much of their income
What may happen is corporation taxes are too high
It may discourage businesses to expand or set up in Ireland
What is a hidden economy?
Very high taxes lead to people evading tax by being paid cash which is difficult to track as there is no record of it in the bank
Why are taxes imposed?
Taxes are imposed for financial, social, legal and ethical reasons
What are the financial reasons for taxation?
Taxes finance the work of the government, to control the price of goods and services
What social reasons are taxes imposed?
Taxation goes towards members of society who need help, taxes are also used to discourage people from engaging in certain behaviour that may be bad for their health or the environment e.g carbon tax/ sugar tax
What legal reasons are taxes imposed?
The payment of taxes is compulsory under Irish law
What ethical reasons are taxes imposed?
When people evade their taxes it affects the governments ability to provide essential services to the public
