Taxation and its principles. Kinds of taxes

Taxation is a system of raising money to finance government services and activities. Governments at all levels – local, provincial, and national-require people and businesses to pay taxes. Governments use the tax revenues to pay the cost of police and fire protection, health programmes, schools, roads, national defence, and many other public services. In modern times, need for tax revenue has increased. Governments levy many kinds of taxes. The most important kinds include property taxes, income taxes, and taxes on transactions.

Property taxes are levied on the value of such property as houses, shops, factories, farms, and business equipment.

Income taxes are levied on income from such sources as wages and salaries, dividends, interest, rent, and earnings of companies.

Capital gains tax is a tax, levied on profits received from the sale or exchange of real property, shares, or other assets.

Other taxes include estate taxes, inheritance taxes, and gift taxes. A good tax system must satisfy several general principles of taxation. The main principles include productivity, equity, and elasticity.

Productivity. The chief goal of a tax system is to generate the revenue a government needs to pay its expenses.

Equity. Most people agree that a tax system should be equitable (fair) to the taxpayers. This is sometimes called the principle of ability to pay.

Elasticity. A tax system should be elastic (flexible) so that it can satisfy the changing financial needs of a government. Under an elastic system, taxes help stabilize the economy.

Task 1. Answer the questions:

What is taxation?
What do government use tax revenues for?
What kind of taxes have you read about?
What are property taxes levied on?
Name general principles of taxation.
What is the goal of a tax system?

Task 2. Complete the sentences with an appropriate preposition from the box, translate the sentences into Russian.

to, on, to, of, for

Taxation is a system … raising money … finance government services and activities.
Need … tax revenue has increased.
Taxes are levied … the value of property, profits and income.
Tax system should be fair … the taxpayers.

Task 3. Translate the following terms into Russian. Use them in the sentences of your own.

1. productivity	5. dept
2. equity	6. deficit
3. elasticity	7. income
4. revenue	8. inflation

Task 4. Form the nouns:

to satisfy -	to equip -	to achieve -
to cover -	to produce -	to apply -
to agree -	to govern -	to grow -
to increase -	to fail -	to prevent -
to stabilize -	to act -	to add -

III. DISCUSSION.

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