Title :Managing the Economy.Aim: To learn how Government manages the Economy.Osborne set to raise tax threshold(UKPA) – 6 hours agoChancellor George Osborne is expected to takehundreds of thousands more low earners outof income tax by raising the threshold toaround £8,000 in his Budget on Wednesday.Expectations of another increase in thethreshold - raised from £6,475 to £7,475 lastyear - were heightened by Treasury ChiefSecretary Danny Alexander, who said theBudget would set out "further real progress" Chancellor Osbornetowards the ultimate goal of taking anyone ( a government ministerearning less than £10,000 out of income tax. chosen by the Prime minister)
Government and theEconomy• Keywords• Government Economy Chancellor Prime Minister• Tax Threshold Budget Pension• Coalition Conservative Liberal Democrats Taxes • Key People • David Cameron • George Osborne • Nick Clegg • Taxpayer
What is a Government• The word Government has the key term Govern within it.• A Government has to be ruled by a majority• Remember to Govern is to see over and to look after a certain person or group.• Therefore a Government is the name given to the organisation of a country’s elected party.• Due to our election we currently have a Coalition Government.• A coalition is the term given to a Government that has been given due to election results to form an overall majority.
Chancellor – George Osborne• The current Chancellor is George Osborne• He is chosen by the Prime Minister• A chancellors role is to be responsible for the income the country and its people.• He sets a budget from which the country will run its services. Economy:• He is in charge of the economy and how the The term is country spends and collects its money. used to• The money that is collected by Government describe the is done through Tax. money cycle• The two types of Tax are Direct and in which the Indirect Taxes Government runs the country.
Direct Tax• Direct taxes are Taxes (money) paid by taxpayers through income or capital .• Examples of Direct Taxes are Income Tax.• Income Tax is taken directly by the Government through wage distribution. The amount taken can be found on a wage slip.• Income Tax differs according to how much a person earns.• Other examples of Direct Tax include:• Inheritance Tax (e.g. Money inherited from family)• National Insurance (e.g. To contribute towards pension)
Examples of Direct TaxOn this payslipthe Income Taxtaken from theperson is seenas ‘PAYE TAX’ This payslip shows the National insurance contributions
Indirect Tax• Indirect Tax is the term given to the money collected by the Government on items or services we buy.• The Government takes Indirect Tax through V.A.T. that is applied on products or services that we buy• V.A.T. stands for Value Added Tax.• Examples of Indirect Tax is the VAT added to Gas, Electricity or Fast Food that we buy.• Other examples of Indirect Tax can also include Council Tax• (If you are over 18 and live in a property as your main home, you will have to pay council tax for that property) Like many taxes this is only paid according to how much your property is worth).• Some people don’t have to pay Council tax including Students, Disabled people
Why Pay Tax?• Originally used back in 1799 for Britain to fund themselves for a war against France• Today it is used for various reasons by the Government• The Government focus on Health, Defence, Education etc.• Taxes make up for 90% of the Government Revenue.• It is also used to manage the Economy• In 2008 the chancellor cut the rate of VAT from 17.5% down to 15% to try and help the economy
Duty• There are certain items of extra Tax placed on certain items because the Government wants less people to use them.• Examples of items that have Excise duty include: Fuel, Tobacco and Alcohol.• Do you think its fair for the Government to use Excise Duty to control peoples behaviour?
How can Tax help poorer people?Osborne set to raise tax threshold (rate)Chancellor George Osborne is expected to take hundreds ofthousands more low earners out of income tax by raisingthe threshold to around £8,000 in his Budget onWednesday.Expectations of another increase in the threshold - raisedfrom £6,475 to £7,475 last year - were heightened byTreasury Chief Secretary Danny Alexander, who said theBudget would set out "further real progress" towards theultimate goal of taking anyone earning less than £10,000out of income tax.
Key Words:Chancellor = Government minister in charge of managingthe economy.Direct Tax= Taxes in income , savings or for businesses profits.Indirect Tax= Taxes on spending.Income tax= Direct tax of income.V.A.T= Value Added Tax is an indirect tax on products and services.Duty = Indirect Tax added to goods such as fuel, tobacco and alcohol.Pension= Money paid to people after they retire.Interest Rate= a % of money that is added to loans or savings over time.
Today Chancellor Osborne has a problem. He needs to pay back national debt because if we don’t the repayments could become too much. If he increases tax to pay the debt he risks damaging businesses growth and this will affect jobs and the economy.If he damages business he will not He could try to get money to pay theget as much tax back and have lessmoney to pay the banks. debt by cutting spending on public services, such as Education. If he does this he risks damaging education and upsetting voters. What should he do ?
Tax V.A.T cut Tax V.A.T rise Bankspeople have more people spend less. Government borrowsMoney to spend. Business makes money and lowersbusiness makes more less money. Business tax. Businessmoney. Pay less tax and make more money.Banks Banks Pensions: Government makesGovernment pays Extra £60 per year Sure banks have moreback loans and raises For all pensioners Food and energy sales Money to lendbusiness tax. Business Go up. Business makes Business activitypay more tax and more money. increases.make less money.Interest Rates Interest Rates Interest RatesIncreased by 1% Increased by 1% Decreased by 1%loans are more loans are more Borrowing increasesexpensive. Sales expensive. Home Borrowers have moreof houses and owners stop spending Money. Spendingcars fall. business makes less increases. Business money. makes more money.
Direct Tax : Income Direct Tax : Income Indirect Tax : Increasetax raised. People tax falls. People in fuel duty. ThisHave less money. Have more money. increases public andBusiness profits fall. Business profits business costs. Business rise. is harmed.Indirect Tax : Decreasein fuel duty. This increases public andbusiness costs.Business is harmed.
Title :Managing the Economy.Aim: To learn how Government manages the Economy.The government needs to get money frompeople so that it can pay for public servicessuch as the army and hospitals.There are two main types of tax.1) Direct Tax = money taken out of wages before the employee gets their money.2) Indirect tax= Tax that people have Chancellor Osborneto pay if they buy or do certain ( a government ministerthings. chosen by the Prime minister)