topic 6 - government Flashcards
levels of government
local, state, federal
local government - role
residual powers delegated by the states to make laws over local responsibilities
local government - expenditure
local roads and streets, garbage collection, sporting and recreational facilities, regulation and licensing, welfare services
local government - revenue
grants, rates, fines, fee and charges
state government - role
concurrent and residual powers to make laws affecting the state
state government - expenditure
education, health, community services, public transport, roads and highways, housing, sporting and recreational facilities, cultural facilities
federal government - role
exclusive powers to make laws affecting the nation and concurrent powers shared with the states
state government - revenue
grants, taxes including GST revenue, income from PTEs, fines, fees and charges
federal government - expenditure
federal government - revenue
making of an act of federal parliament (order)
a bill reflects gov policy -> draft bill -> the house of representatives -> the senate -> royal assent and publication
tax
plays an important role in distributing income. It can be used as an
income redistribution device when the government decides to tax
individuals in the economy at different rates.
concepts of tax
tax base, average rate of tax (ART), marginal rate of tax (MRT)
tax base
simply the items that are taxed. There are three main bases
for the imposition of taxes — income, wealth and consumption. In
Australia, income forms the main tax base.
3 bases for imposition of tax (tax base)
income, wealth and consumption
average rate of tax (ART)
The proportion of total income earned that is paid in the form of tax.
more you earn = ↑ ART
low income = small ART
marginal rate of tax (MRT)
The proportion of any increase in income that
must be paid as tax. Therefore, it represents how many cents in every
extra dollar earned that must be paid to the government
types of tax
progressive, regressive, proportional
progressive tax
higher Y -> ↑ tax
Under a progressive tax, higher income earners would pay a greater proportion of their income as tax
than lower income earners (i.e. ART rises as an individual’s
income increases)
regressive tax (+ example)
lower Y -> ↑ tax
Under a regressive tax, higher income earners would pay a smaller proportion of their income as tax
than lower income earners (i.e. ART falls as an individual’s
income increases)
EXAMPLE: gst
proportional tax
same rate of tax
Under a proportional tax, all income
earners pay the same proportion of their income as tax (i.e.
ART remains constant as an individual’s income increases)
-> ART = MRT
