GOVERNMENT ANDTAXATION

MK, U 22, p. 109-113RB, p. 36-41

What is your opinion about the following issues?

1. Health care should be paid for byA. private health insurance.B. government.

2. The government shouldA. not interfere in the market except to ensure fair competition.B. remedy social inequalities that arise from market

competition.

3. A country shouldA. secure cheaper goods through low import tax.B. protect its own producers by making foreign products more

expensive .

4. Lower production costs are more important than public interest.

A. True.

B. False

5. Choose the sentence you agree with:

A. People should be entitled to use the fruits of their labour as they wish.

B. Those who produce more value should be made to help those who cannot or are too lazy to work.

6. Natural resources (eg., oil, gas) should be owned by the state.

A. False.

B. True.

The quiz created by Boglarka Kiss Kulenović

What is the role of the government?

A Important as it provides essential serviceseducation healthcare social security public transporthousingregulated working conditionshealth and safety standards

B Restricted role of the. government

:It ensures defence

the police

the justice system

Everything else is left to private enterprises and the market system

JOHN KENNETH GALBRAITH (1908-2006)• A leading proponent of 20th-century American

liberalism• Taught at Harvard University• Active in Democratic Party politics• Adviser in Kennedy’s administration• Defended permanent price controls• Stressed the importance of public policy• His major proposal was a program- “investment in

men” a large- scale publicly-funded education program aimed at empowering ordinary citizens

• Stressed the importance of government regulation and oversight

• Defended government intervention but believed that government and big business should work together to maintain stability

Galbraith: tasks

Answer the questions in the Resource bank. Try to define a “good society” or a welfare state

(država blagostanja) based on the text.

WELFARE STATE A concept of government in which the state plays

a key role in the protection and promotion of the -economic and social well being .of its citizens

The government provides basic services such as, healthcare social security and education and

oversees employment in order to help maintain ’ .the standard of living of the state s citizens

FRIEDMAN (1912-2006) Leading “Chicago School” free market economist A monetarist – stressed the importance of the quantity

of money as an instrument of government policy and as a determinant of business cycles and inflation

A classical liberal or what today is called a neo-liberal – believes in free markets, without governmental intervention

A defender of individual freedom His ideas on privatization and deregulation were taken

up by the Reagan administration in the US and the Thatcher government in the UK in the 1980s and later influential in many central and eastern European countries

Won the Nobel Prize for Economics in 1976

What is the Friedmans’ opinion of the activities of the US government?

In the Friedmans’ opinion, the role of the US government has expanded far too much. Its interventions in the economy might even end economic progress.

The government severely limits people’s freedom to spend their money and work as they choose.

WHAT COULD BE THE QUESTIONS FOR ?THE FOLLOWING ANSWERS

1. They believe that government intervention-limitations imposed on economic freedom-threatens to end 200 years of economic progress.

2. Currently, more than 40% of our income is disposed of on our behalf by the government at federal, state and local levels combined.

3. They disapprove of laws that prevent physicians (doctors) prescribing some drugs (medicines) that have been banned in the US, and that make it compulsory to have seat belts in cars.

4. All business activities and transactions should be voluntary and nobody should use force or coercion.

5. They believe that workers should be free to work any number of hours they agree with their employer, without restrictions imposed by the government.

- GOOD SOCIETY WELFARE STATE

( ’ ’ )based on Galbraith s and Friedman s texts

PROS CONS

SPEAKING TASK

Student A: Present Freedman’s arguments to your

partner.Student B: Present Galbraith’s arguments to your

partner.

HOME ASSIGNMENT WATCH and LISTEN TO DAVID CAMERON AND

MAKE A SUMMARY http://www.youtube.com/watch?v=3ELnyoso6vI

TAXATION

Taxation refers to the act of a taxing authority actually levying tax.

Taxation as a term applies to all types of taxes, from income to gift to estate taxes.

The purpose: to raise revenue for the government’s public spending

www.investopedia.com/terms/t/taxation.asp

COLLOCATIONS SORT THESE PHRASES OUT:

be liable to pay a tax/levy a tax/ evade a tax/collect a tax/impose a tax/avoid a tax/ fill in a tax return/put sb. in a tax bracket/ file a tax return/ be exempt from tax /exploit a loophole/ increase a tax/provide a tax relief

TAXPAYER GOVERNMENT (citizen) (TAX authorities)

. PROGREESSIVE vs REGRESSIVE TAX

A progressive tax is defined as a tax whose rate increases as the payer's income increases. That is, individuals who earn high incomes have a greater proportion of their incomes taken to pay the tax.

A regressive tax is one whose rate increases as the payer's income decreases.

 

A Flat Tax A system that applies the same tax rate to every taxpayer regardless of income bracket.

. TAX EVASION vs TAX AVOIDANCE

What is the difference between tax evasion (utaja poreza) and tax avoidance (izbjegavanje plaćanja poreza, plaćanje samo zakonskog minimuma)?

Match the term and the definition:

Making false declarations TAX AVOIDANCEto the tax authorities.

Reducing the amount of tax TAX EVASIONyou pay to a legal minimum.

TAX EVASIONMaking false declarations to the tax authorities.

TAX AVOIDANCEReducing the amount of tax you pay to a legal minimum.

. DIRECT vs INDIRECT TAXES

The most fundamental classification of taxes is based on who collects the taxes from the tax payer.

Direct Taxes are taxes that are directly paid to the government by the taxpayer. It is a tax applied on individuals and organizations directly by the government

e.g. income tax, corporation tax, wealth tax etc.

Indirect Taxes are applied on the manufacture or sale of goods and services. These are initially paid to the government by an intermediary, who then adds the amount of the tax paid to the value of the goods / services and passes on the total amount to the end user.

Examples of these are sales tax, service tax, excise duty etc.

TYPES OF TAXES

DO THE VOCABULARY TASK in MK, p. 112

S ort out the following taxes INTO TWO:GROUPS

V – ( ), , alue added tax VAT capital gains tax excise ( ) , , duty trošarina paid on petrol alcohol cigarettes

, , and luxury goods income tax customs duty( ) , carinska pristojba paid on imported goods

, , inheritance tax wealth tax sales tax

DIRECT TAX INDIRECT TAX

DIRECT TAX Inheritance tax Wealth tax Capital gains tax Income tax

INDIRECT TAX

Excise duty (trošarine), paid on petrol, alcohol, cigarettes and luxury goods

Customs duty (carinska pristojba) paid on imported goods

Sales tax (porez na prodaju)

Value-added tax (VAT) (or Cro PDV)

Find the english equivalent for the following tax termS:

o Porez na kapitalni dobitak Porez tvrtke na dobit Porez na osobni dohodak Porez na prodaju Porez na dodanu vrijednost Porezna prijava Porezna olakšica Utaja poreza Izbjegavanje plaćanja

poreza (zakonitim putem)

Find the english equivalent for the following tax term:

o Porez na kapitalni dobitak Porez poduzeća na profit Porez na osobni dohodak Porez na prodaju Porez na dodanu

vrijednost Porezna prijava Porezna olakšica Utaja poreza Izbjegavanje plaćanja

poreza (zakonitim putem)

o Capital gains tax Corporate income taxo Income tax Sales tax Value added tax Tax return Tax relief Tax evasion Tax avoidance

, Fill in the gaps with verbs NOUNS andprepositions

_____ .Companies pay taxes their profits ___________ This type of tax is at a higher rate on

.higher incomes ____ ________________ You are liable pay an tax if you

receive some valuable gifts from the members of .your family

, In February all the citizens in Croatia are liable to_______ ___________ .their tax to the tax administration

__________ ______________ ’ The tax is on peoples wages .and salaries

__________ Which income tax does the tax ?administration put you in

, Fill in the gaps with verbs NOUNS andprepositions

Companies pay taxes ON .their profits This type of tax is LEVIED at a higher rate on higher

.incomes You are liable TO pay an INHERITANCE tax if you

receive some valuable gifts from the members of .your family

, In February all the citizens in Croatia are liable toFILE _their tax RETURN .to the tax administration

The INCOME tax is IMPOSED ’ on peoples wages and.salaries

Which income tax BRACKET does the tax ?administration put you in

HOME ASSIGNMENTS

1. ( The role of government Watch David ) – Cameron on Ted link provided on

15slide2. 27 29Do exercises on slide and3. , . 113 Read MK p and sort out the

arguments against and in favour of government spending