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Taxation
Quiz on taxation
| Question | Answer |
|---|---|
| List Adam Smith's canons of taxation | Equity, economy, certainty, convenience |
| Explain the canon of taxation: equity | As your income rises, you should pay more taxes. The ability of each person to pay must be taken into account. |
| Explain the canon of taxation: economy | The amount of revenue collected should exceed the cost of collection. |
| Explain the canon of taxation: certainty | The amount paid should be unambiguous, certain and clear. |
| Explain the canon of taxation: convenience | Tax should be levied at a convenient time and manner for the contributor. |
| List five principles of a fair tax system | Taxes should be equitable, taxes should be certain, taxes should be convenient, taxes should be economical, evasion should not be possible. |
| Explain an ad valorem tax | A tax that increases with the value of the good, eg VAT and customs duties. |
| Define direct taxes | Taxes on income and wealth, eg PAYE, capital gains tax, capital gains tax, capital acquisition tax and DIRT. |
| Define indirect taxes | Taxes on transactions/spending, eg VAT, custom duties and stamp duties. |
| List and explain the two types of tax, giving an example in each case. | Progressive tax. A tax that increases proportionately more with a person's income, eg income tax. Regressive tax. A tax that takes proportionately less as a person's income increases, eg the carbon tax and household charges. |
| Define tax harmonisation | The aim of members of the EU and other trading blocks to move all tax rates to the same rates, ie align with each member state/country. |
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omeliaeconomics
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