Tax System Design

Read the text below carefully and underline the parts of it giving basic ideas about the desired features of a tax system.

Recent studies have singled out some of the desired features of the tax system that should emerge as countries develop. They are as follows:

= Concentration of revenue sources. A system that raises revenue from a limited number of taxes and rates may substantially reduce administration and compliance costs. Avoidance of numerous taxes may also facilitate the assessment of the effects of policy changes and avoid an impression of excessive taxation.

= Broad and objectively defined tax bases. A broad tax base with limited exemptions enables revenue to be raised with relatively low rates. Substantial erosion of the tax base through exemptions requires much higher rates to achieve a given amount of revenue. Tax bases should be defined so as to ensure that producers and consumers can clearly estimate their tax liability when they plan activities.

= Minimization of collection lags. In an inflationary environment the real value of tax receipts may decline substantially when there are long legs in payments. High penalties are necessary to ensure that legal delays are not compounded by delinquency lags.

= Tax neutrality. The tax system should finance government operations with the least cost and disturbance to the patterns of production, and the generation and use of income. Hence, neutrality of the tax system is considered desirable, in the sense that distortions in incentives should be limited unless there are compelling reasons to discourage the production, consumption or trade of a particular commodity. The activity, most profitable before tax, should remain most attractive after tax.

Words you may need:

administration costs – витрати, пов’язані із збиранням податків

compliance costs – витрати, пов’язані із забезпеченням дотримання податкового законодавства

tax liability – податкові зобов’язання

lag – запізнювання, розрив

penalty – штраф

compound – ускладнювати, збільшувати

delinquency – правопорушення

neutrality – нейтральність

disturbance – порушення

žTests

I. Mark the correct answers on the following questions:

1.To the national taxes and other compulsory payments we can deliver:

a) excise tax;

b) the market collection;

c) rental payment;

d) profit tax;

e) rate.

2.Match the local taxes:

a) advertising tax;

b) commercial patent payment;

c) hotel payment;

d) craft tax.

3.Match taxes, which are paid by the juridical persons:

a) tax on income;

b) value-added tax;

c) craft tax;

d) excise tax

4.Match taxes which are paid by legal and natural persons:

a) land-tax;

b) craft tax;

c) rate;

d) tax paid by the transport owners.

5.Name the functions of the tax administration:

a) implementation of the tax documents control;

b) numeration of the tax volumes;

c) implementation of the checking up the special licenses;

d) implementation of the control of the fullness and timeliness of the tax payments.

II.Fill the tables:

a)

b)

III. Match what statements are true and what are false. Results write to the table:

1. To have an effective tax system, government must have criteria or standards.
2. People seem to be more willing to pay taxes, when they don’t understand them.
3. A tax should be easy to collect.
4. It should require a large enforcement staff.
5. People always agree about what is or is not fair when it comes to taxes.
6. It is possible to measure benefits, derived from government spending.
7. People with higher incomes suffer less discomfort than people with lower incomes even if they pay higher taxes.
8. The only means most people have of paying taxes is the income they earn.

Table

True
False

ì Unit 4

MONETARY POLICY. CENTRAL BANKING.

Дата добавления: 2014-11-29