Title :Managing the Economy.

Aim: To learn how Government manages the Economy.

Osborne set to raise tax threshold(UKPA) – 6 hours agoChancellor George Osborne is expected to take hundreds of thousands more low earners out of income tax by raising the threshold to around £8,000 in his Budget on Wednesday.Expectations of another increase in the threshold - raised from £6,475 to £7,475 last year - were heightened by Treasury Chief Secretary Danny Alexander, who said the Budget would set out "further real progress" towards the ultimate goal of taking anyone earning less than £10,000 out of income tax.

Chancellor Osborne ( a government ministerchosen by the Prime minister)

Government and the Economy• Keywords• Government Economy Chancellor Prime Minister

• Tax Threshold Budget Pension

• Coalition Conservative Liberal Democrats Taxes

• Key People

• David Cameron

• George Osborne

• Nick Clegg

• Taxpayer

What is a Government

• The word Government has the key term Govern within it.

• A Government has to be ruled by a majority

• Remember to Govern is to see over and to look after a certain person or group.

• Therefore a Government is the name given to the organisation of a country’s elected party.

• Due to our election we currently have a Coalition Government.

• A coalition is the term given to a Government that has been given due to election results to form an overall majority.

Chancellor – George Osborne

• The current Chancellor is George Osborne• He is chosen by the Prime Minister• A chancellors role is to be responsible for

the income the country and its people.• He sets a budget from which the country

will run its services.• He is in charge of the economy and how the

country spends and collects its money.• The money that is collected by Government

is done through Tax. • The two types of Tax are Direct and

Indirect Taxes

Economy:The term is used to describe the money cycle in which the Government runs the country.

Direct Tax

• Direct taxes are Taxes (money) paid by taxpayers through income or capital .

• Examples of Direct Taxes are Income Tax.

• Income Tax is taken directly by the Government through wage distribution. The amount taken can be found on a wage slip.

• Income Tax differs according to how much a person earns.

• Other examples of Direct Tax include:

• Inheritance Tax (e.g. Money inherited from family)

• National Insurance (e.g. To contribute towards pension)

Examples of Direct Tax

On this payslip the Income Tax taken from the person is seen as ‘PAYE TAX’

This payslip shows the National insurance contributions

Indirect Tax

• Indirect Tax is the term given to the money collected by the Government on items or services we buy.

• The Government takes Indirect Tax through V.A.T. that is applied on products or services that we buy

• V.A.T. stands for Value Added Tax.• Examples of Indirect Tax is the VAT added to Gas,

Electricity or Fast Food that we buy.• Other examples of Indirect Tax can also include Council

Tax• (If you are over 18 and live in a property as your main

home, you will have to pay council tax for that property) Like many taxes this is only paid according to how much your property is worth).

• Some people don’t have to pay Council tax including Students, Disabled people

Examples of Indirect Tax

What % of Tax do we pay?

Why Pay Tax?

• Originally used back in 1799 for Britain to fund themselves for a war against France

• Today it is used for various reasons by the Government

• The Government focus on Health, Defence, Educationetc.

• Taxes make up for 90% of the Government Revenue.

• It is also used to manage the Economy

• In 2008 the chancellor cut the rate of VAT from 17.5% down to 15% to try and help the economy

Duty

• There are certain items of extra Tax placed on certain items because the Government wants less people to use them.

• Examples of items that have Excise duty include: Fuel, Tobacco and Alcohol.

• Do you think its fair for the Government to use Excise Duty to control peoples behaviour?

How can Tax help poorer people?

Osborne set to raise tax threshold (rate)

Chancellor George Osborne is expected to take hundreds of thousands more low earners out of income tax by raising the threshold to around £8,000 in his Budget on Wednesday.

Expectations of another increase in the threshold - raised from £6,475 to £7,475 last year - were heightened by Treasury Chief Secretary Danny Alexander, who said the Budget would set out "further real progress" towards the ultimate goal of taking anyone earning less than £10,000 out of income tax.

Key Words:

Chancellor = Government minister in charge of managingthe economy.

Direct Tax= Taxes in income , savings or for businesses profits.

Indirect Tax= Taxes on spending.

Income tax= Direct tax of income.

V.A.T= Value Added Tax is an indirect tax on products and services.

Duty = Indirect Tax added to goods such as fuel, tobacco and alcohol.

Pension= Money paid to people after they retire.

Interest Rate= a % of money that is added to loans or savings over time.

Today Chancellor Osborne has a problem.

He needs to pay back national debt because

if we don’t the repayments could become

too much. If he increases tax to pay the

debt he risks damaging businesses growth

and this will affect jobs and the economy.

He could try to get money to pay the

debt by cutting spending on public

services, such as Education. If he does

this he risks damaging education and

upsetting voters. What should he do ?

If he damages business he will notget as much tax back and have lessmoney to pay the banks.

Tax V.A.T cutpeople have moreMoney to spend. business makes moremoney.

Tax V.A.T risepeople spend less.Business makes less money.

Banks Government borrows money and lowers Business tax. BusinessPay less tax and makemore money.

Banks Government paysback loans and raisesbusiness tax. Businesspay more tax andmake less money.

Pensions: Extra £60 per year For all pensionersFood and energy salesGo up. Business makesmore money.

Banks Government makes Sure banks have moreMoney to lend Business activityincreases.

Interest RatesIncreased by 1%loans are moreexpensive. Salesof houses and cars fall.

Interest RatesIncreased by 1%loans are moreexpensive. Homeowners stop spending business makes lessmoney.

Interest RatesDecreased by 1%Borrowing increasesBorrowers have moreMoney. Spending increases. Business makes more money.

Direct Tax : Income tax raised. People Have less money. Business profits fall.

Direct Tax : Income tax falls. People Have more money. Business profits rise.

Indirect Tax : Increase in fuel duty. Thisincreases public andbusiness costs. Businessis harmed.

Indirect Tax : Decrease in fuel duty. Thisincreases public andbusiness costs. Business is harmed.

Title :Managing the Economy.

Aim: To learn how Government manages the Economy.

The government needs to get money from people so that it can pay for public services such as the army and hospitals.

There are two main types of tax.

1) Direct Tax = money taken out of wages before the employee gets their money.

2) Indirect tax= Tax that people have to pay if they buy or do certain things.

Chancellor Osborne ( a government ministerchosen by the Prime minister)