2020-09-24
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1. Indirect taxation is a system of collecting taxes ___ adding an amount to the price of goods and services that people buy.
2. Sales tax levied ___ the manufacture, purchase, sale, or consumption of a specific commodity is known as an excise tax.
3. Direct taxes are taxes on persons; they are aimed ___ the individual’s ability to pay as measured by his income or his net wealth.
4. Income taxes are often levied ___ graduated rates, that is, at rates that rise as income rises.
5. Sales tax is a tax that you have to pay ___ addition to the cost of something you are buying.
6. Progressive tax is a tax that takes a larger percentage of money ___ people with higher incomes than ___ people with lower incomes.
Exercise 7. Word formation.
Complete these sentences using the base word given at the end of each sentence. You need to form an appropriate word. The first one (0) is given as an example.
0. A proportional system is one in which everyone pays percentage in taxes. (PAYMENT)
1. A progressive tax system is also a way to address economic ___ in a society.
(INEQUALITIES)
2. A high degree of inequality can be lessened by taxing high-income households at a ___ higher rate than low-income households. (RELATIVE)
3. Increasing the progressivity of the tax system or altering the ___ of benefits allows redistribution of economic resources. (DISTRIBUTE)
4. Extremely high tax rates at high-income levels might create a significant ___ that reduces the productive capacity of society. (INCENTIVE)
5. Many people receive ___ income from three standard sources: interest, capital gains, and dividends. (INVEST)
6. While income taxes are subject to ___ or credits, these taxes are often fairly rigid. (DEDUCT)
7. Flat tax can be defined as a tax structure with a uniform ___ rate. (MARGIN)
8. Corporations are also ___ to pay income tax. (LIABILITY)
9. A capital gains tax is a tax on the ___ of any asset that is held for at least 365 days. (PROFITABLE)
10. A direct tax is one that is ___ upon the property, business, or income of the individual who is to pay the tax. (ASSESSMENT)
Exercise 8.
Match the words (1-4) with their definitions (A-D).
1. Proportional tax A tax where the revenue collected rises more than
proportionally to income.
2. Progressive tax B tax in which the amount of tax paid is proportional
to the size of the tax base, i.e. a tax with a single
rate.
3. Regressive tax C tax levied on something that is considered morally
or medically harmful, such as alcohol or tobacco.
4. Sin tax D tax in which the rate of tax decreases as income
increases.
UNIT EXTENSION
Exercise 9. Two-minute presentation.
Choose one of the following subjects about classes of taxes and prepare to give a two-minute presentation about it to the group.
1 Classes of taxes in your country
2 The advantages and disadvantages of a regressive tax
3 The advantages and disadvantages of aproportional tax
4 The advantages and disadvantages of aprogressive tax
5 Classification of taxes
6 Taxes on essential goods and services
7 Social security tax
8 Fixed Taxes and Fees
9 Income tax. (the UK, the USA, China, etc.)
PART 2
TOPIC FOCUS: Direct and Indirect Taxes
Discuss these questions with a partner.
1. What are the main forms of public spending?
2. How does the government generate money?
3. How does taxation of goods and services affect consumers?
The government has to perform a number of functions and provide various services to its citizens, including education, health and social care. Those services are financed entirely from the public revenue. The government generates revenue from various sources, such as fees, fines, surchargesand taxes. Taxes are the major source of public revenue and are divided into two groups: directand indirect taxes.
Direct Taxes
Direct taxes are imposed on income, property, or wealth of individuals or companies. They are paid directly to the government. A burden of direct taxes cannot be passed on to another individual or entity. Direct taxes include:
Personal Income Tax
· Corporate Income Tax (UK: Corporation Tax)
· Capital Gains Tax
· Social Security Contributions
· Property Tax
· Inheritance Tax
· Stamp Duty Land Tax (US: Transfer Tax)
· Local and Municipal Taxes (UK: Council Tax)
Indirect Taxes
As opposed to direct taxes, levied on persons or organizations, indirect taxes are levied on goods or services and paid by consumers. Unlike direct taxes, the burden of indirect taxes can be shifted from one taxpayer to another by means of an increase in the price of goods or services. Indirect taxes can have two forms: a specificor unit tax, which is a fixed amount paid per each unit of goods or services sold, regardless of its price, and an ad valorem tax, which is a percentage of the value of goods and services sold. The example of unit tax is Excise Duty, while the most important ad valorem tax is Value Added Tax. Indirect taxes include:
· Value Added Tax
· Sales Tax
· Customs Duty
· Excise Duty
· Tariffs
Exercise 1.
In the text, find the answers to the following questions.
1. What are direct taxes levied on?
2. What is the difference between direct and indirect taxes?
3. How can the burden of indirect taxes be shifted to another individual or entity?
4. What is the difference between the two forms of indirect taxes?
5. Who carries the major burden of indirect taxation?
Exercise 2. Find a word in the text that matches each definition below. The words appear in order.
1. (two words) Revenues earned by the government ________________
2. A charge for professional services ________________
3. Financial penalty ________________
4. A tax added to an existing tax ________________
5. (two words) A tax paid by consumers when they buy goods or services ______
6. (three words) A tax levied on profit from the sale of property or of an investment
________________
7. (two words) A tax imposed on someone who inherits property or money
________________
8. (two words) A fixed amount of tax paid per each unit of goods or services sold
________________
9. (three words) A percentage of value of goods and services paid as tax
________________
10. (two words) An indirect tax on the sale or use of specific products, usually applied as an amount per quantity of the product ________________
GRAMMAR FOCUS:
Present Continuous Tense
Exercise 3. You are a head of the tax accounting department in a large accounting firm. You are on holiday and want to make sure everything is going as it should in your absence. You are on the phone with your secretary. Ask questions to find out who is doing what. Use the prompts below, as well as your own ideas.
negotiate an engagement with a client
prepare a due diligence report for a client
conduct an audit of a client’s financial records
analyse budget estimates
launch a new marketing campaign
evaluate a trainee’s performance
Example: Is John negotiating an engagement with a client?
