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THE ROLE OF GOVERNMENT

THE ROLE OF GOVERNMENT. u nnecessary laws or enough law s ?. GOVERNMENT ROLE. a) essential - the economic infrastructure (public transport, telecommunications…) - services (education, health care , social security...) - left wing views.

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THE ROLE OF GOVERNMENT

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  1. THE ROLE OF GOVERNMENT unnecessary laws or enough laws?

  2. GOVERNMENT ROLE a) essential- the economic infrastructure (public transport, telecommunications…) - services(education, health care, social security...) - left wing views

  3. b) restricted- defence, the police, the justice system - too much regulation bad for business (inefficiency) - right wing views

  4. AREAS OF RESPONSIBILITY • Maintenance of a low level of unemployment • Price stability (low levels of inflation) • High economic growth (GDP) • Balance on foreign trade (more exports than imports)

  5. GROSS DOMESTIC PRODUCTGDP goods & services produced within a country’s borders GDP = C + G + I + NX C = all private consumption/consumer spending G = government spending I = investment/ all the country’s business spending on capital NX = total net exports (total exports minus total imports)

  6. More jobs - more money Lower inflation – cheaper production More exports – more money Higher growth – better standard of living Social welfare – health, comfort, happiness

  7. RB: p: 19 • What areas does Galbraith describe as responsibilities of the state? • What does G. say about the people who criticise government services? • According to G. the market system is not sufficient to guarantee scientific research. Why?

  8. http://www.ted.com/talks/lang/eng/david_cameron.html The leader of Britain's Conservative Party says we're entering a new era….. Summarize his words.

  9. TAXATION(MacKenzie, page 112) http://www.youtube.com/watch?v=oi6BQLM4aqo&feature=related

  10. TYPES OF TAXES 1. INCOME TAX– on wages / salaries (progressive / direct) 2. NATIONAL INSURANCE (NI) – for the Job Seekers Allowance, paid by both the employer and employee 3. VALUE ADDED TAX (VAT) – added to the price of goods and services 4. COUNCIL TAX– charged by local councils

  11. 5. EXCISE DUTIES- a tax on goods such as alcohol, petrol or tobacco - to discourage spending 6. CORPORATION TAX - on the firm’s profits 7. CAPITAL GAINS TAX (CGT) – on people’s fortunes 8. CAPITAL TRANSFER TAX- on profits made by selling assets 9. INHERITANCE TAX – gifts to family members 10. CUSTOMS– tax when goods are brought in from other countries

  12. BUSINESS CYCLE Cutting taxes →incomes are higher → demand for more products → increase of output → reducing unemployment → increase in demand → higher prices → inflation

  13. http://www.youtube.com/watch?v=1g_2kFRrJGM – austerity measures cutting taxes = increase in government spending governments cut taxes in a recession increasetaxes during a boom introduce austerity measures – An official action taken by a government in order to reduce the amount of money that it spends or the amount that people spend

  14. a tax / duty on something • pay an amount of money in tax / duty / customs • collect taxes / duties • increase / raise / reduce / cut / taxes • impose a tax / duty • put a tax on something • taxable income / profit / goods

  15. THEFUNCTIONOF TAXATION raise revenue to finance government expenditure encourage capital investment to reducetax bills dissuade people from smoking, drinking….

  16. ARGUMENTS FOR TAXATION 1. Developing the infrastructure (roads, rails, electricity supply, water supply) 2. Everybody has to contribute toward the support of the government (education, health, culture) 3. Widespread poverty leads to crime

  17. ARGUMENTS AGAINST TAXATION • The money people earn is their money, the resultof hard work (taxes should be kept as low as possible) • Taxing savings and capital gains encourages consumptionand reduces capital accumulation and therefore reduces everyone’s future prosperity

  18. TAX EVASION= illegal = crime black / underground economy grey / hidden economy-undeclared jobs moonlight (moonlighters) - have a second job without paying tax head offices in tax havens - countries with low taxes money laundry -drugs, prostitution, people trafficking through an offshore bank - located in a country with more generous tax laws

  19. TAX AVOIDANCE = legal perks / benefits - company cars, mobile phones, free health insurance, subsidized lunches tax shelters - postpone the payment of tax (life insurance policies, pension funds) tax deductibles – donations to charities tax loss – when total expenses are greater than total revenues under the tax reporting rules of the applicable government jurisdiction

  20. http://www.investopedia.com/video/play/tax-avoidance-vs-tax-evasion#axzz1cI2dsZXmhttp://www.investopedia.com/video/play/tax-avoidance-vs-tax-evasion#axzz1cI2dsZXm Explain the difference between tax avoidance and tax evasion. _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

  21. GROUP ASSIGNMENT 1. MK: P.113 task 4 and 5 Do a short presentation on taxation (advantages / disadvantages) 2. http://www.newyorker.com/talk/financial/2011/07/11/110711ta_talk_surowiecki#ixzz1b2zp85LZ Read the text “Dodger Mania” and fill in the blanks: Greece has had to adopt more stringent _____________ plans in order to secure a ___________ from the EU. Greece got in this mess due to _______________public _____________.Tax ________________is the national pastime. The “shadow ________________” is larger in Greece than in almost any other European country. ______________ are devoting plenty of time to hiding their income. To have a ___________ tax system you have to enforce the law. Greek tax ______________were notoriously easy to bribe. Enforcement of the tax laws loosened in the months leading up to __________________. Even when the system tracked down evaders, the tax courts took seven to ten years to resolve a case. Greek citizens are not compliant ________________. Their tax system was riddled with loopholes and exemptions: famous people were given ______________ rates, while shipping tycoons paid no ______________ tax at all and some other professions were legally allowed to ______________ their income. A hefty chunk of the population _______________ on its taxes. If tax ____________ is so common, people trust the system less, which makes them less willing to pay taxes. Because so many don’t _______________, the government has had to raise taxes on those who do. Now the Greek government is rationalizing its tax - _________________ system. It has simplified taxes and done away with some of the ________________. Tax reform will be a ___________order for Greece and the future of the EU may depend on it.

  22. MAKE A LIST OF THE RED MARKED EXPRESSIONS FROM THE TEXT AND MAKE A SUMMARY ON THE TAX-COLLECTION SYSTEM IN CROATIA. • __________________________________________________________ • __________________________________________________________ • __________________________________________________________ • __________________________________________________________ • __________________________________________________________ • __________________________________________________________ • __________________________________________________________ • __________________________________________________________ • __________________________________________________________ • __________________________________________________________ • __________________________________________________________ • __________________________________________________________ • __________________________________________________________ • __________________________________________________________ • __________________________________________________________ • ___________________________________________________________ • ___________________________________________________________ • ___________________________________________________________ • ___________________________________________________________ • ___________________________________________________________ • ___________________________________________________________

  23. http://www.youtube.com/watch?v=6qqG6OurHaM&feature=watch-vrechttp://www.youtube.com/watch?v=6qqG6OurHaM&feature=watch-vrec

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