Tax Flashcards
Define tax
A compulsory payment to the government
Define indirect tax
Taxes on expenditure, paid to the tax authority.
What is direct tax?
Taxes on income and profits, paid directly by the bearer to the authorities
What is income tax?
A tax taken out of a person’s income. In the UK tax is progressive (the more you earn the more tax you pay)
Define national insurance
Taken as a contribution towards the state pension and treatment under the NHS- THE EMPLOYER ALSO PAYS
What does VAT stand for ?
Value Added Tax
What is VAT?
Vat is included in the selling price of goods and services
What can a business do with VAT?
A business who is registered with HMRC can claim VAT on items they have spent VAT on (supplies)
What is the standard VAT rate?
20%
What is corporation tax?
A tax on profits made by businesses and companies
What is current corporation tax rate in the UK?
19%
What is stamp duty?
A tax in the purchase of a property
What is the purpose of taxation?
Raises large amounts of revenue for the government to spend on public services such as education and health care (government spending accounts for 40% of GDP)
What is the economic impact caused by tax?
Tax controls economic activity
What does tax do to expenditure.
Influences customers to buy certain items and encourage certain behaviour and discourage others
