Taxes

Question 1

Government revenue

Answer 1

Money received by government
Important tool of fiscal policy such as tax revenue , non tax revenue (fines, fees) and capital receipts (cash from sales of business)

Question 2

Taxations

Answer 2

1. Indirect tax - VAT 18%
   Import duties
   Excise duties (payable on production/extraction or importation of certain goods from non eu countries made available for consumption in Malta )
   Stamp duty - payable on policies of insurance and transfers of immovable properties situated in Malta and certain securities 0.1-11%
2. Direct tax - person income(progressive rates )
   - corporate income tax (resident and non resident companies are subject to tax at the rate 35%

Question 3

Principle of tax

Answer 3

Tax is a compulsory contribution to state revenue imposed by govt

Question 4

Effects of tax

Answer 4

1. Work/save people -reducing of disposable income of taxpayers, reducing their expenditure on necessities required to be consumed for the sake of improving efficiency
2. Allocation of resources - tax can influence volume/size of production as well as the pattern of production in the economy
3. Income distribution - progressive (steeply) reduces income inequity, regressive - increase inequality of income. Progressive - favourable effect on output.

Question 5

Budget deficit

Answer 5

When an individual, business or govt budget more spending than available revenue available to pay for the spending. Cause- spending more than collected in tax

1. Periods of economic growth/decline effect ability of govt to finance its spending.
2. Reflected as a percentage of GDP may decrease in times of economic prosperity

Question 6

National debt

Answer 6

Each year government borrows it adds to the amount of debt. The total amount of money borrowed by the public sector is called national debt. If the government has a budget surplus it can use th money to pay back some of the national debt

1. Increase taxes
2. Reduction of benefits for unemployment or lower income benfits
3. Merit goods will only be for those who can afford them
4. Decreasing pensioners benefits

Question 7

The budget

Answer 7

The government sets out its plans for public spending and raising/decreasing taxes and other revenues. In the budget the government may change tax rates, announce new taxes or abolish old ones

Question 8

Budget surplus

Answer 8

Government spending less than it expects to receive from public revenue