Taxation

Question 1

Indirect Taxes=

Answer 1

Taxes on spending. They are paid to the tax authorities not by the consumers, but indirectly by the suppliers of the goods or services

Question 2

Direct Taxes=

Answer 2

These are taxes on income and profits. Paid directly by the bearer to the tax authorities

Question 3

Examples of Indirect Tax:

Answer 3

• VAT= Value Added Tax. Standard rate is 20%
• Tobacco/ alcohol/ petrol
• Stamp Duty

Question 4

Examples of Direct Tax:

Answer 4

• National Insurance
• Corporation Tax
• Income Tax

Question 5

Stamp Duty=

Answer 5

A price of ‘tax’ when purchasing a property. Additional amount to pay. Doesn’t apply to first time buyers up to a certain amount

Question 6

What is the purpose of taxation?

Answer 6

1. If the Government needs to raise more money to spend on public services they could increase tax eg: Income Tax
2. If House Price Inflation was out of control they could increase Stamp Duty to discourage people to buy
3. To influence expenditure on certain items

Question 7

Monetary Policy=

Answer 7

Manipulation of the level of demand in the economy using THE INTEREST RATE

Question 8

Fiscal Policy=

Answer 8

Economic policy used to influence the level of spending in an economy. It is conducted by the Government through TAXATION AND PUBLIC SPENDING

Question 9

Supply- Side Policies=

Answer 9

Aim to improve the economy’s overall productive capacity. Act on SUPPLY rather than DEMAND