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Taxation
| Term | Definition |
|---|---|
| Functions of Tax | To finance government activities, Redistribution of national wealth, Automatic stabiliser,To achieve some economic objectives. |
| Canons of tax | equitable, economical, certain, convenient. |
| Tax avoidance | Is arranging one’s affairs within the law so as to minimise tax liabilities. |
| Tax evasion | Is reducing tax liabilities by making false returns or not making any returns at all. |
| A progressive tax | Takes a higher percentage of income from a person as that person’s taxable income increases, e.g. PAYE. |
| A regressive tax | Takes a higher percentage of income from a low-income earner than from a high-income earner, e.g. VAT. |
| A proportional tax | Takes a constant rate of tax from income as income rises. |
| Impact/Imposition of Taxation | This refers to the individuals or companies on whom the tax is actually levied |
| Incidence of a Tax | This refers to the people who bear the burden of the tax. |
| Direct tax | Taxes on all forms of income, it is a progressive and equitable tax |
| Indirect tax | Taxes on transactions, it is a regressive and inequitable tax |
| Capital Gains tax | Is a tax on the profits from the sale of assets. |
| Stealth Tax | A tax that it is largely unnoticed or not recognised as a tax e.g. water charges, household charge. |
| Tax Wedge | The difference between the cost of an employee to their employer (wages + tax + prsi) and the take-home pay of the employee. |
Created by:
Calasanctius Eco
Popular Economics sets