1 / 36

Understanding Taxation: Characteristics and Perspectives

Learn about the characteristics of a tax system, arguments for and against tax, and the importance of taxation from financial, social, legal, and ethical perspectives. Explore direct and indirect taxation, including examples like income tax, corporation tax, DIRT, and water charges. Engage in debates and examine the impact of taxes on society.

oward
Download Presentation

Understanding Taxation: Characteristics and Perspectives

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Learning Intentions At the end of this unit I will: • Know about the characteristics of a tax system • Be able to make arguments for and against tax • Understand the results of choices from different perspectives • Value the importance of taxation from a financial, social, legal and ethical perspective

  2. 3

  3. BEFORE WE BEGIN #04AFEF Do this exercise individually or in pairs. Tick whether you agree or disagree with the statements. Revisit it after the unit to see if you have changed your mind about any of them.

  4. ‘3Ts’ = Turn, Think, Talk • Do you have any savings in a savings account? Did you know that you pay DIRT on your savings? • What might happen if the government reduced DIRT? Wonderful Worthwhile Websites www.revenue.ie www.citizensinformation.ie

  5. Why Pay Tax? Tax is a compulsory payment to the government. • Taxation is an important source of income/revenue for the government • The government needs money to provide services to run the country • Taxation is a way to redistributeincome/wealth • Taxation can influence what consumers use • Taxation can encourage savings • Taxes on imports can protect goods produced in a country 6

  6. Be an Historian According to Adam Smith, there are four principles of taxation: • Equality or equity • Certainty • Convenience • Economy 7

  7. Characteristics of a Tax System A tax system should have the following characteristics: • Equitable E C C E • The more you earn the more tax you pay • Certain • Each tax payer should know how much tax they have to pay • Convenient • It should be convenient for the tax payer • Economical • The cost of collecting the tax should only be a proportion of the tax revenue 8

  8. Direct and Indirect Taxation Taxes can be divided into two basic types: • Direct taxation: tax on income or wealth • Indirect taxation: tax on goods and services Direct tax is considered a progressive tax as it is linked to income earned. Indirect tax is considered a regressive tax because everyone pays the same amount, regardless of income. 9

  9. Direct Taxation A direct tax is a tax on income or wealth and is paid by the income earner. The more earned, the more tax is paid. Direct taxes include the following: • Income tax (PAYE) • Universal Social Charge (USC) • Pay Related Social Insurance (PRSI) • Corporation tax • Deposit interest retention tax (DIRT) • Water charges • Local property tax (LPT) 10

  10. Corporation Tax • The corporation tax in Ireland is low in order to encourage companies to set up here Corporation tax is a tax paid by companies that are making a profit. • Some would say this gives Ireland an unfair advantage over other countries 11

  11. DIRT (Deposit Interest Retention Tax) • DIRT is taken directly from your interest and forwarded to the exchequer DIRT is tax paid on the interest you receive on your savings. • It is additional income for the government • DIRT affects the better off more than the less well off 12

  12. Water Charges Water charges were introduced in 2013. They were suspended in 2016. Pros Cons • Source of income for the government • Consumers have less money to spend in the economy • Used to maintain and improve the water supply • Considerable extra expense for larger families • To encourage households to reduce water shortage • It is inequitable – high and low earners pay the same • Brings Ireland in line with other EU countries who have this tax 13

  13. Time to think Do you think water charges are equitable, certain, convenient and economical?

  14. Local Property Tax Property tax came into effect in 2013 and is charged on the market value of all residential properties in the State. Pros • It’s a source of income for the government Cons • It reduces consumer spending as more is spent on tax • It is inequitable – high earners and low earners pay the same 15

  15. WORKING WITH OTHERS #04AFEF Debating is an excellent way to view both perspectives or sides of an arguments. Debate the following motion: ‘Property tax should be avoided.’ Page 451

  16. Indirect Taxation Indirect taxation is tax on goods and services. It is paid to the seller, who in turns pays it to Revenue. Indirect taxes include the following: • Value added tax (VAT) • Import tax • Motor registration tax • Excise tax 17

  17. WORKING WITH OTHERS #04AFEF What’s your view? • Be the Government • Be the Individual • Be the Business Look at the USC, water charges and DIRT and give reasons for and reasons against having these taxes. Page 452

  18. CHECKING IN • Why does the government collect taxes? • What is direct taxation? Give two examples. • What is indirect taxation? Give two examples.

  19. CASE STUDY THE BITTERSWEET TRUTH – TAX ON SUGAR Read the case study on page 452. Why might a government tax sugar consumption?

  20. WORKING WITH OTHERS #04AFEF • Research the amount of sugar in the drinks your class consumes on a weekly basis. Are you surprised? Present your information in a visual form. • Will any of your class change drinks as a result of the findings? Should there be a tax on these drinks, with extra tax on the ones that contain the most sugar? • What might be the results of consuming excessive amounts of sugar? Page 453

  21. Tax Avoidance • Taxation is an extra cost/expense for businesses Do you think it is ethical for organisations to avoid tax? Tax avoidance is when organisations try to avoid paying tax. • This expense is recorded in the Income Statement • A business will try to reduce tax costs by availing of government incentives, such as tax allowances, deductions, rebates, exemptions • Tax avoidance is legal, but can be seen as bending the rules 22

  22. Time to think • What are your thoughts on tax avoidance? • If you found out a company was avoiding paying tax, would it put you off the company?

  23. Paying a Fair Share • Some very successful and profitable multinational businesses pay little or no local corporation tax • Is it fair that multinationals avoid paying their fair share of taxes? • Paying a fair amount of tax is the socially responsible thing for a company to do • On the other hand is it the responsibility of businesses to maximise profit? 24

  24. Tax Evasion • It can involve under-declaring or not declaring income to Revenue Tax evasion means using illegal methods of not paying tax. • Tax evasion is a criminal offence • Revenue has powers to tackle tax evaders, including getting secure information about taxpayers from third parties and financial institutions • Tax clearance certificates - introduced in the 1980s to help combat tax evasion 25

  25. Did You Know? Revenue has an online service known as ROS (Revenue Online Service). ROS is an internet facility that allows taxpayers a quick and secure way to file their access information and details about their tax. ROS is available 24 hours a day, 7 days a week, 365 days a year. You can take a look at ROS onwww.revenue.ie 26

  26. Importance of Taxation • Be Financial • Tax is an expense for individuals and organisations • Tax is income for the government • Be Social • We need taxation to ensure a better society • Be Legal • We have to pay tax by law • Tax avoidance is legal, but is it ethical? • Tax evasion is illegal • Be Ethical • Paying taxes helps everyone in the country 27

  27. Be a Researcher Copy and fill in the personal taxation learning sheet on page 455. Define, Rate and Describe the drift (DRD). Use websites to source information. www.revenue.ie www.finfacts.ie Can you find any other websites? 28

  28. CHECKING IN • What is tax avoidance. Do you think it’s ethical? • What is tax evasion? Is it legal? • Why is taxation important?

  29. 3.5 TAXATION • Which of the following is an example of indirect taxation? Quick Quiz Local Property Tax (LPT) Universal Social Charge (USC) Value Added Tax (VAT)

  30. 3.5 TAXATION • Which of the following is an example of indirect taxation? Quick Quiz Local Property Tax (LPT) Universal Social Charge (USC) Value Added Tax (VAT)

  31. 3.5 TAXATION • Which of the following is an example of indirect taxation? Quick Quiz Local Property Tax (LPT) Universal Social Charge (USC) Value Added Tax (VAT)

  32. 3.5 TAXATION • Which of the following is an example of indirect taxation? Quick Quiz Local Property Tax (LPT) Universal Social Charge (USC) Value Added Tax (VAT)

  33. 3.5 TAXATION • Value Added Tax (VAT) is an example of indirect taxation. Quick Quiz: Review • Local Property Tax (LPT) and the Universal Social Charge (USC) are examples of direct taxation.

  34. 35

  35. Deposit Interest Retention Tax (DIRT) • Local property tax • Tax avoidance • Tax evasion • Taxation • Universal social charge (USC) • Water charges

More Related