2020-09-24
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Read the text and complete it with the following words.
exemptions sells income evasion
percentage supply chain regressive pays production
DEFINITION OF VALUE-ADDED TAX
A tax levied at each stage in the (1)___________ of a good or service that results in value being added to the product. For example, a timber company pays a percentage on the timber it sells to a miller. The miller then pays the same (2)____________ (less what the timber company paid) on the timber it has refined into planks of wood, which it then sells to a carpenter. The carpenter likewise (3)_________ the same percentage (less what the timber company and miller paid) on the planks of wood he/she makes into a table, which he/she then (4)_________ to a customer. Proponents of a VAT state that each person or company along the (5)___________ has an incentive to ensure that every other person or company pays the VAT, reducing the likelihood of tax (6)_________. They also argue that it is more straightforward than other taxes because there are no (7)__________ or loopholes. Opponents of a VAT counter that the tax is (8)___________ and unduly harms poor people, who, as a rule, spend more of their discretionary (9)________ on necessary items.
Exercise 5. Text completion.
A) Read this article about VAT in which some headlines are missing. Discuss with a partner what headlines you would expect to find in each gap.
VAT: what, how much and why?
1.___________________________
VAT is a tax you pay when you buy goods and services in the European Union, including in the UK. If you have to pay VAT on something it will normally be included in the price you see on the shelf. In some circumstances you might be able to get a refund of any VAT you have paid, for example if you live outside the EU and are visiting the UK.
2.____________________________
Each EU country has its own VAT rate, and in the UK there are three rates. The standard rate is currently 20% and applies to most goods and services. A reduced rate of 5% is payable on items such as children's car seats and gas and electricity for your home, and there is a zero rate too.
3._____________________________
There are a few categories of goods and services that do not attract VAT:
• Basic or staple food items, but not meals in restaurants or takeaway meals
• Books, newspapers and magazines
• Children's clothing and shoes
• Sanitary protection such as pads and tampons
• Public transport fares
• Installation of energy-saving materials
• Some goods provided in special circumstances, for example equipment and vehicles for disabled people such as stair lifts and grab rails
There are also some VAT exemptions on medical grounds.
4.__________________________
There are some items that are either "exempt", such as insurance and membership subscriptions, or deemed to be outside the scope of VAT. Included in the latter would be the proceeds of selling stamps from your own private collection, and fees which are fixed by law – known as "statutory fees" – such as the congestion charge or the vehicle MoT test.
5.___________________________
No. Takeaway meals like fish and chips will continue to attract VAT, and although the "pasty tax" will be reversed there will be still situations in which consumers have to pay more to have a warm snack like this. If hot takeaway food is cooling "naturally" in glass cabinets or displays it will not be subject to 20%, as had been originally planned. But food being deliberately kept warm under lights or on hot plates will be subject to the tax.
B) Match these headlines (A-E) with the gaps in the article (1-5).
A Is the pasty tax VAT-free?
B What items do we pay zero VAT on?
C What is the rate of VAT?
D What is VAT?
E Is there anything else not covered by VAT?
Exercise 6.
Fill in the following prepositions where necessary.
for (x2) at in by of on
Value-added tax is a tax levied (1)_____ increases in a product's value (2)______ each stage of production and distribution. The value-added tax, essentially an invisible sales tax included (3)______ the final price, is ultimately paid (4)_______ consumers. For example, a candy maker paying $10,000 for ingredients used in the manufacture of chocolate bars that are resold (5)_______ $15,000 would be required to pay a tax on the $5,000 of value added to the product. Proponents (6)______ the value-added tax argue that it should be substituted (7)______ the current federal income tax to stimulate consumer saving.
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. The tax code is the result of political, not economic, forces. (POLICY)
1. VAT is a general ________tax used in virtually every major country except the USA. (CONSUME)
2. The tax applies to all _______ activities that involved the production and distribution of goods and the provision of services. (COMMERCE)
3. Sales tax and VAT can be________ on products at a uniform rate. (LEVY)
4. The company accepts no ________ for delays caused by bad weather. (LIABLE)
5. Businesses will collect VAT from you and me, and pay VAT on what they buy. The difference between those amounts will be paid to, or collected back from ___________ (GOVERN)
6. The entire economy helps in the enforcement by collecting the tax at each ________ level. (PRODUCE)
7. Another _________ between sales taxes and VAT is that the former tend to be levied on virtually all goods, while some items may be exempt from VAT or zero-rated. (DIFFER)
8. __________ income is not expected to be calculated in the same way in every country. (TAX)
9. The very system of Value Added Tax was introduced for the first time in the market by the modern French __________. (ECONOMY)
Exercise 8.
Match the words (1-4) with their definitions (A-D).
1. Zero rated A amount received by a seller as a percentage of the
gross sale price of goods or services
2. Output VAT B amount paid by a buyer as a percentage of the gross
purchase price for goods or services used in production
3. Exempt C transactions in which the seller collects no output tax and the corresponding input tax is fully
refundable
4. Input VAT D transactions in which the seller collects no output
tax but the corresponding input tax is non-refundable and absorbed by the seller
UNIT EXTENSION
Exercise 9. Two-minute presentation
