This document summarizes key concepts related to income taxation. It defines the comprehensive income tax base, which includes all sources of income, and explains why governments tax some sources separately. It discusses principles of international taxation and how countries approach the taxation of domestic vs foreign-source income. It also outlines South Africa's personal income tax system, including tax rates, exemptions, deductions, and rebates. It analyzes the economic effects of personal income taxes, addressing efficiency, equity, administration, and flexibility.
This document summarizes key concepts from Chapter 10 of the textbook "Black et al" on tax efficiency and tax reform. It discusses the excess burden of taxation using indifference curve analysis and the consumer surplus approach. It also covers tax efficiency, administrative efficiency, tax flexibility, patterns of taxation in developed and less developed countries, directions of international tax reform, and tax reform experiences in South Africa. The key ideas are analyzing taxes using the excess burden and exploring how to increase tax and administrative efficiency.
This document provides an overview and definitions related to taxation. It discusses sources of government revenue including taxation, user charges, borrowing, and inflation. It defines taxes and outlines different tax classifications such as the tax base (income, wealth, consumption), rates (proportional, progressive, regressive), and types (general vs. selective, specific vs. ad valorem, direct vs. indirect). The key properties of a good tax and concepts of tax equity like the benefit and ability-to-pay principles are explained. Partial equilibrium analysis is used to analyze how the economic incidence of different taxes is shared between buyers and sellers based on price elasticities.
The document discusses the principle of ability to pay and progressive taxation in Nepal. It states that those with more wealth or higher incomes should pay more in taxes, as a means of income redistribution. It also explains that tax burden should relate to one's ability to pay taxes, not what they receive from the government. It then analyzes different ways to measure ability to pay, concluding that income is the best measure. The document finishes by defining progressive taxation as when tax rates increase as income increases, and provides Nepal's income tax rates as an example.
This document provides an overview of taxation concepts including:
- Direct taxes like income tax are generally progressive while indirect taxes like sales tax are typically regressive.
- The Value-Added Tax introduced in 2005 aimed to broaden the tax base and increase revenues by limiting input tax credits for firms and raising tax rates.
- "Sin taxes" on goods like alcohol and tobacco were converted from ad valorem to specific taxes to curb misdeclaration and better adjust for inflation.
- The true incidence and burden of taxes depends on factors like time horizon and the openness of the economy.
Is the process by which the sovereign, through its lawmaking body raises revenues used to defray expenses of government.
Means of the government in increasing its revenue under the authority of the law purposely used to promote welfare and protection of its citizenry.
This document defines taxation and provides explanations of key concepts related to taxation. It discusses:
- Definitions of taxation including it being a means for governments to generate revenue to fund services.
- Taxation being an inherent power of governments to impose contributions on individuals, property, and rights.
- Principles of taxation including benefit principle, ability-to-pay principle, and equal distribution principle.
- Characteristics of a sound tax system including fiscal adequacy, equality, administrative feasibility, and consistency with economic goals.
- Classification of different types of taxes and entities that may be exempted from taxation.
- Concepts like situs of taxation, double taxation, and forms of escape
This document summarizes key concepts from Chapter 10 of the textbook "Black et al" on tax efficiency and tax reform. It discusses the excess burden of taxation using indifference curve analysis and the consumer surplus approach. It also covers tax efficiency, administrative efficiency, tax flexibility, patterns of taxation in developed and less developed countries, directions of international tax reform, and tax reform experiences in South Africa. The key ideas are analyzing taxes using the excess burden and exploring how to increase tax and administrative efficiency.
This document provides an overview and definitions related to taxation. It discusses sources of government revenue including taxation, user charges, borrowing, and inflation. It defines taxes and outlines different tax classifications such as the tax base (income, wealth, consumption), rates (proportional, progressive, regressive), and types (general vs. selective, specific vs. ad valorem, direct vs. indirect). The key properties of a good tax and concepts of tax equity like the benefit and ability-to-pay principles are explained. Partial equilibrium analysis is used to analyze how the economic incidence of different taxes is shared between buyers and sellers based on price elasticities.
The document discusses the principle of ability to pay and progressive taxation in Nepal. It states that those with more wealth or higher incomes should pay more in taxes, as a means of income redistribution. It also explains that tax burden should relate to one's ability to pay taxes, not what they receive from the government. It then analyzes different ways to measure ability to pay, concluding that income is the best measure. The document finishes by defining progressive taxation as when tax rates increase as income increases, and provides Nepal's income tax rates as an example.
This document provides an overview of taxation concepts including:
- Direct taxes like income tax are generally progressive while indirect taxes like sales tax are typically regressive.
- The Value-Added Tax introduced in 2005 aimed to broaden the tax base and increase revenues by limiting input tax credits for firms and raising tax rates.
- "Sin taxes" on goods like alcohol and tobacco were converted from ad valorem to specific taxes to curb misdeclaration and better adjust for inflation.
- The true incidence and burden of taxes depends on factors like time horizon and the openness of the economy.
Is the process by which the sovereign, through its lawmaking body raises revenues used to defray expenses of government.
Means of the government in increasing its revenue under the authority of the law purposely used to promote welfare and protection of its citizenry.
This document defines taxation and provides explanations of key concepts related to taxation. It discusses:
- Definitions of taxation including it being a means for governments to generate revenue to fund services.
- Taxation being an inherent power of governments to impose contributions on individuals, property, and rights.
- Principles of taxation including benefit principle, ability-to-pay principle, and equal distribution principle.
- Characteristics of a sound tax system including fiscal adequacy, equality, administrative feasibility, and consistency with economic goals.
- Classification of different types of taxes and entities that may be exempted from taxation.
- Concepts like situs of taxation, double taxation, and forms of escape
Taxation is a system of compulsory contributions levied by a government to fund public expenditures. Governments increase taxes to stabilize prices, stimulate production, and influence the economy. A sound tax system is fair, clear, certain, convenient, and efficient. Different types of taxes, such as income tax, value-added tax, and capital gains tax, can affect personal and corporate decisions in various ways. Tax incidence refers to who ultimately bears the burden of a tax, and taxes can be shifted through higher prices or lower costs. Tax evasion involves illegal attempts to lessen one's taxes through fraud or underreporting.
This document outlines general principles of taxation, including definitions of key tax-related terms. It defines taxes as enforced contributions levied by governments to support public needs. Taxes have several elements, including being enforced contributions paid in money that are proportionate and levied for public purposes like infrastructure and social services. The document also distinguishes different types of taxes based on criteria like the subject being taxed, who bears the burden, how the amount is determined, the purpose, and more. It provides examples to illustrate different tax classifications.
This paper investigates the relationship between tax structures and economic growth in a panel of developed and developing countries, using the new ICTD GRD. It sought to understand the effects of tax structure on GDP growth, since many previous studies have only focused on OECD countries.
It is also motivated by the IMF Policy prescription (IMF 2011), of on-going shift from reliance on trade taxes to VAT, especially in low income countries. It further sought to understand the implications of such structural shifts with studies showing that revenue recovery following trade liberalisation has been poor in low- and middle- income countries (Baunsgaard & Keen, 2010).
Results suggest that shifts away from trade and consumption toward income taxes have had a negative impact on GDP growth rates in developing countries. This negative effect is of greater magnitude through personal income taxes (PIC). Consequently, this study provides new evidence of potentially harmful effect of trade liberalisation on the GDP growth rates. The study also gives a clear picture of low tax reliance on indirect taxes between in low-income countries.
Revenue neutral shifts away from trade taxes to consumption taxes have no negative effect on growth. However, revenue neutral shifts towards income, specifically personal income taxes are potentially harmful to GDP growth rates. Key findings hold following the exclusion of resource-rich countries and after controlling for degree of openness.
Here are the key differences between direct and indirect taxes:
Direct Tax:
- Paid by the person on whom the tax is legally imposed
- The person paying the tax is the same person bearing the burden of the tax
- Examples include income tax, property tax
Indirect Tax:
- Imposed on one person but partly or wholly paid by another
- The person paying the tax is different from the person bearing the economic burden/incidence of the tax
- Examples include sales tax, VAT, excise duty
So in summary:
Direct tax is paid by and borne by the same person. Indirect tax is paid by one person but the economic burden is borne by another. Direct taxes
This chapter discusses the importance of understanding taxes and how they influence business, investment, personal, and political decisions. It defines what constitutes a tax and describes different tax structures and rates. Key points include:
- Taxes are payments required by the government unrelated to specific benefits received.
- Tax rates can be marginal, average, or effective and are usually expressed as a percentage of the tax base.
- Tax structures can be proportional, progressive, or regressive depending on how rates change with the tax base.
- Major taxes include federal income, employment, excise, and estate/gift taxes as well as state/local sales, property, income, and excise taxes.
The document discusses public revenue, which is the income of the government from all sources used to fund its operations and provide services. Public revenue comes from tax receipts like income tax, as well as non-tax sources like user fees, borrowing, and income from state-owned businesses. It describes different types of taxes like direct and indirect taxes, and characteristics of a tax system, including progressive, proportional, and regressive structures. Specific topics covered include tax revenue, non-tax revenue, types of taxes, and principles of taxation.
The document defines taxation and income taxation. It discusses the concepts, principles, theories, structures, and significance of taxation. It also covers the classification of taxes, taxpayers, public officers in charge of tax collection, and tax remedies. Key points include that taxation is the process by which governments raise revenue to fund public services and that income tax refers specifically to taxes imposed on a taxpayer's net income within a taxable period.
Taxing powers, scope and limitations of nga and lgunormina
This document provides an outline for a presentation on public fiscal administration. It discusses the taxation powers, scope, and limitations of national government agencies and local government units. Specifically, it covers the major sources of funds for the national government, the different types of national taxes imposed by the Bureau of Internal Revenue, and the scope and limitations of the taxation powers of national government agencies.
This document provides an overview of taxation in India. It defines taxation and its objectives, such as raising revenue. It describes different types of taxes like direct and indirect taxes. It outlines principles of a good tax system according to Adam Smith's canons of taxation. It also details India's individual income tax rates, exemptions, and deductions from taxable income. The document concludes that taxation helps increase economic activity and promote growth through mobilizing funds.
Structure of taxation and classification of taxesshaik moin
Tax is a compulsory payment to the government and can be direct or indirect. Direct taxes have an immediate burden on the taxpayer, like income and wealth taxes. Indirect taxes are collected by intermediaries and included in the price, like sales tax. Governments in India levy various direct and indirect taxes. The central government levies income, wealth, customs, excise and service taxes. State governments levy professional, entertainment, VAT and state excise duties. Local governments levy property, water and sewerage taxes. Direct taxes are more equitable but also more complex and unpopular. Indirect taxes are more convenient but also more inflationary and expensive to collect.
This document distinguishes between direct and indirect taxes. Direct taxes include income tax, corporation tax, capital gains tax, and capital transfer tax, which are paid by individuals and businesses directly. Indirect taxes are levied on the consumption of goods and services, through taxes like customs duty, excise duty, stamp duty, and sales/consumption taxes that are paid by manufacturers and importers and passed on to consumers. Examples are provided of calculating income tax, capital gains tax, customs duties, and excise taxes to illustrate how these different types of direct and indirect taxes are applied.
The document discusses the design of the U.S. tax system. It describes how the federal government collects about two-thirds of taxes, mainly from individual income tax and payroll taxes. State and local governments collect the remaining taxes, primarily from sales and property taxes. The goals of the tax system are efficiency by minimizing costs, and equity by fairly distributing the tax burden according to ability to pay.
1) The document discusses the concept of excess burden of tax, which refers to the loss of economic welfare that arises due to distortions in consumption and production patterns caused by taxes.
2) It provides examples using demand and supply diagrams to illustrate how a tax leads to deadweight loss by reducing consumer surplus and producer surplus.
3) The excess burden can be measured under the old welfare economics framework using utility comparisons or under the new welfare economics framework using partial or general equilibrium conditions without utility comparisons.
Individual income, payroll, and corporate income taxes cover about two-thirds of US government spending, with the remaining one-third financed by borrowing. In 2014, around 15% of government spending was expected to be financed through deficits. Tax expenditures, such as deductions, credits, and exclusions, have grown over time and now cost almost as much as total income tax revenue. Many tax expenditures function similarly to government spending programs.
Taxes are financial charges imposed by the government on persons and entities to raise revenues needed to fund government operations and services. There are several types of taxes including income tax, value-added tax, property tax, and excise tax. Taxes are collected by the Bureau of Internal Revenue and local government and are the primary means for governments to generate revenues to support expenditures. The tax system in the Philippines covers both national and local taxes and aims to be uniform, equitable and progressive.
The document discusses taxation in Kazakhstan, including the development of its tax code over time. It outlines 9 main types of taxes used in jurisdictions, classified into classes. The types include corporate income tax, VAT, individual income tax, rent tax, property tax, land tax, excise tax, vehicle tax, and social tax. The purposes of taxation are also summarized as supporting government operations, functioning of government, managing macroeconomic performance, redistributing resources, and modifying patterns of consumption or employment.
This chapter introduces taxes and their impact. It discusses how taxes influence business, investment, personal and political decisions. It defines what constitutes a tax and identifies different federal, state and local taxes. It also covers tax rate structures, how to calculate taxes, and criteria for evaluating tax systems including sufficiency, equity, certainty, convenience and economy.
Fiscal policy refers to government attempts to influence the economy through taxes and spending. There are three stances of fiscal policy: neutral, expansionary, and contractionary. Government financing can be achieved through taxes, debt, or seigniorage. Taxes serve four main purposes: revenue, redistribution, repricing, and representation. Fiscal policy works through both discretionary and non-discretionary elements, such as automatic increases in government spending during economic slowdowns.
The document discusses different theories and principles related to taxation. It begins by defining taxation and describing the key aspects of a taxation system, including the purposes of taxation. It then discusses several theories of taxation, including:
1) The expediency theory, which states that the main consideration in taxation should be practicality and administrability.
2) The socio-political theory, which argues that social and political objectives, rather than individual interests, should guide taxation policy.
3) The benefits-received theory and cost-of-service theory, which propose tax liability should be linked to the benefits and services received from the state.
It also covers principles of taxation like equity, certainty, and convenience
Government revenue(Public Fiscal Administration)Suzana Vaidya
The document discusses government revenue and taxation. It defines government revenue as money received by a government from sources like taxes on income, wealth, goods, services, exports/imports, and non-tax sources like profits from state-owned corporations. Revenue is used to fund government services that benefit the public like infrastructure development. The main sources of government revenue are taxes, non-tax revenue, and capital receipts. Taxes are either direct taxes paid directly by individuals/corporations or indirect taxes paid to intermediaries and passed on to consumers. Non-tax revenue comes from sources like dividends, interest, fees, and grants. A good tax system aims to raise sufficient and equitable revenue while minimizing economic burden and incentivizing productivity
Taxation is a system of compulsory contributions levied by a government to fund public expenditures. Governments increase taxes to stabilize prices, stimulate production, and influence the economy. A sound tax system is fair, clear, certain, convenient, and efficient. Different types of taxes, such as income tax, value-added tax, and capital gains tax, can affect personal and corporate decisions in various ways. Tax incidence refers to who ultimately bears the burden of a tax, and taxes can be shifted through higher prices or lower costs. Tax evasion involves illegal attempts to lessen one's taxes through fraud or underreporting.
This document outlines general principles of taxation, including definitions of key tax-related terms. It defines taxes as enforced contributions levied by governments to support public needs. Taxes have several elements, including being enforced contributions paid in money that are proportionate and levied for public purposes like infrastructure and social services. The document also distinguishes different types of taxes based on criteria like the subject being taxed, who bears the burden, how the amount is determined, the purpose, and more. It provides examples to illustrate different tax classifications.
This paper investigates the relationship between tax structures and economic growth in a panel of developed and developing countries, using the new ICTD GRD. It sought to understand the effects of tax structure on GDP growth, since many previous studies have only focused on OECD countries.
It is also motivated by the IMF Policy prescription (IMF 2011), of on-going shift from reliance on trade taxes to VAT, especially in low income countries. It further sought to understand the implications of such structural shifts with studies showing that revenue recovery following trade liberalisation has been poor in low- and middle- income countries (Baunsgaard & Keen, 2010).
Results suggest that shifts away from trade and consumption toward income taxes have had a negative impact on GDP growth rates in developing countries. This negative effect is of greater magnitude through personal income taxes (PIC). Consequently, this study provides new evidence of potentially harmful effect of trade liberalisation on the GDP growth rates. The study also gives a clear picture of low tax reliance on indirect taxes between in low-income countries.
Revenue neutral shifts away from trade taxes to consumption taxes have no negative effect on growth. However, revenue neutral shifts towards income, specifically personal income taxes are potentially harmful to GDP growth rates. Key findings hold following the exclusion of resource-rich countries and after controlling for degree of openness.
Here are the key differences between direct and indirect taxes:
Direct Tax:
- Paid by the person on whom the tax is legally imposed
- The person paying the tax is the same person bearing the burden of the tax
- Examples include income tax, property tax
Indirect Tax:
- Imposed on one person but partly or wholly paid by another
- The person paying the tax is different from the person bearing the economic burden/incidence of the tax
- Examples include sales tax, VAT, excise duty
So in summary:
Direct tax is paid by and borne by the same person. Indirect tax is paid by one person but the economic burden is borne by another. Direct taxes
This chapter discusses the importance of understanding taxes and how they influence business, investment, personal, and political decisions. It defines what constitutes a tax and describes different tax structures and rates. Key points include:
- Taxes are payments required by the government unrelated to specific benefits received.
- Tax rates can be marginal, average, or effective and are usually expressed as a percentage of the tax base.
- Tax structures can be proportional, progressive, or regressive depending on how rates change with the tax base.
- Major taxes include federal income, employment, excise, and estate/gift taxes as well as state/local sales, property, income, and excise taxes.
The document discusses public revenue, which is the income of the government from all sources used to fund its operations and provide services. Public revenue comes from tax receipts like income tax, as well as non-tax sources like user fees, borrowing, and income from state-owned businesses. It describes different types of taxes like direct and indirect taxes, and characteristics of a tax system, including progressive, proportional, and regressive structures. Specific topics covered include tax revenue, non-tax revenue, types of taxes, and principles of taxation.
The document defines taxation and income taxation. It discusses the concepts, principles, theories, structures, and significance of taxation. It also covers the classification of taxes, taxpayers, public officers in charge of tax collection, and tax remedies. Key points include that taxation is the process by which governments raise revenue to fund public services and that income tax refers specifically to taxes imposed on a taxpayer's net income within a taxable period.
Taxing powers, scope and limitations of nga and lgunormina
This document provides an outline for a presentation on public fiscal administration. It discusses the taxation powers, scope, and limitations of national government agencies and local government units. Specifically, it covers the major sources of funds for the national government, the different types of national taxes imposed by the Bureau of Internal Revenue, and the scope and limitations of the taxation powers of national government agencies.
This document provides an overview of taxation in India. It defines taxation and its objectives, such as raising revenue. It describes different types of taxes like direct and indirect taxes. It outlines principles of a good tax system according to Adam Smith's canons of taxation. It also details India's individual income tax rates, exemptions, and deductions from taxable income. The document concludes that taxation helps increase economic activity and promote growth through mobilizing funds.
Structure of taxation and classification of taxesshaik moin
Tax is a compulsory payment to the government and can be direct or indirect. Direct taxes have an immediate burden on the taxpayer, like income and wealth taxes. Indirect taxes are collected by intermediaries and included in the price, like sales tax. Governments in India levy various direct and indirect taxes. The central government levies income, wealth, customs, excise and service taxes. State governments levy professional, entertainment, VAT and state excise duties. Local governments levy property, water and sewerage taxes. Direct taxes are more equitable but also more complex and unpopular. Indirect taxes are more convenient but also more inflationary and expensive to collect.
This document distinguishes between direct and indirect taxes. Direct taxes include income tax, corporation tax, capital gains tax, and capital transfer tax, which are paid by individuals and businesses directly. Indirect taxes are levied on the consumption of goods and services, through taxes like customs duty, excise duty, stamp duty, and sales/consumption taxes that are paid by manufacturers and importers and passed on to consumers. Examples are provided of calculating income tax, capital gains tax, customs duties, and excise taxes to illustrate how these different types of direct and indirect taxes are applied.
The document discusses the design of the U.S. tax system. It describes how the federal government collects about two-thirds of taxes, mainly from individual income tax and payroll taxes. State and local governments collect the remaining taxes, primarily from sales and property taxes. The goals of the tax system are efficiency by minimizing costs, and equity by fairly distributing the tax burden according to ability to pay.
1) The document discusses the concept of excess burden of tax, which refers to the loss of economic welfare that arises due to distortions in consumption and production patterns caused by taxes.
2) It provides examples using demand and supply diagrams to illustrate how a tax leads to deadweight loss by reducing consumer surplus and producer surplus.
3) The excess burden can be measured under the old welfare economics framework using utility comparisons or under the new welfare economics framework using partial or general equilibrium conditions without utility comparisons.
Individual income, payroll, and corporate income taxes cover about two-thirds of US government spending, with the remaining one-third financed by borrowing. In 2014, around 15% of government spending was expected to be financed through deficits. Tax expenditures, such as deductions, credits, and exclusions, have grown over time and now cost almost as much as total income tax revenue. Many tax expenditures function similarly to government spending programs.
Taxes are financial charges imposed by the government on persons and entities to raise revenues needed to fund government operations and services. There are several types of taxes including income tax, value-added tax, property tax, and excise tax. Taxes are collected by the Bureau of Internal Revenue and local government and are the primary means for governments to generate revenues to support expenditures. The tax system in the Philippines covers both national and local taxes and aims to be uniform, equitable and progressive.
The document discusses taxation in Kazakhstan, including the development of its tax code over time. It outlines 9 main types of taxes used in jurisdictions, classified into classes. The types include corporate income tax, VAT, individual income tax, rent tax, property tax, land tax, excise tax, vehicle tax, and social tax. The purposes of taxation are also summarized as supporting government operations, functioning of government, managing macroeconomic performance, redistributing resources, and modifying patterns of consumption or employment.
This chapter introduces taxes and their impact. It discusses how taxes influence business, investment, personal and political decisions. It defines what constitutes a tax and identifies different federal, state and local taxes. It also covers tax rate structures, how to calculate taxes, and criteria for evaluating tax systems including sufficiency, equity, certainty, convenience and economy.
Fiscal policy refers to government attempts to influence the economy through taxes and spending. There are three stances of fiscal policy: neutral, expansionary, and contractionary. Government financing can be achieved through taxes, debt, or seigniorage. Taxes serve four main purposes: revenue, redistribution, repricing, and representation. Fiscal policy works through both discretionary and non-discretionary elements, such as automatic increases in government spending during economic slowdowns.
The document discusses different theories and principles related to taxation. It begins by defining taxation and describing the key aspects of a taxation system, including the purposes of taxation. It then discusses several theories of taxation, including:
1) The expediency theory, which states that the main consideration in taxation should be practicality and administrability.
2) The socio-political theory, which argues that social and political objectives, rather than individual interests, should guide taxation policy.
3) The benefits-received theory and cost-of-service theory, which propose tax liability should be linked to the benefits and services received from the state.
It also covers principles of taxation like equity, certainty, and convenience
Government revenue(Public Fiscal Administration)Suzana Vaidya
The document discusses government revenue and taxation. It defines government revenue as money received by a government from sources like taxes on income, wealth, goods, services, exports/imports, and non-tax sources like profits from state-owned corporations. Revenue is used to fund government services that benefit the public like infrastructure development. The main sources of government revenue are taxes, non-tax revenue, and capital receipts. Taxes are either direct taxes paid directly by individuals/corporations or indirect taxes paid to intermediaries and passed on to consumers. Non-tax revenue comes from sources like dividends, interest, fees, and grants. A good tax system aims to raise sufficient and equitable revenue while minimizing economic burden and incentivizing productivity
This document provides an overview of tax and national insurance regulations in the UK. It discusses income tax rates and personal allowances, as well as common tax codes. National insurance is paid to receive state benefits and rates vary depending on employment status. The document also covers topics like tax years, tax-free thresholds, and forms like P45 and P46.
The document provides an overview of key concepts in taxation, including:
- Tax purposes include raising revenue and influencing economic and social policy.
- Tax structures can be progressive, proportional, or regressive based on how tax rates change with the tax base.
- The U.S. federal income tax uses a mildly progressive structure for individuals and corporations.
- Tax law is created through legislation and administered by the IRS, which selects some returns for audit each year.
Tax Foundation University 2017, Part 2: Understanding How Fiscal Changes Impa...Tax Foundation
This presentation examines how the tax system slows economic development and hampers international competitiveness.
It covers why getting the tax base right is at least as important as reducing the statutory tax rates, and examines alternative tax regimes.
It estimates what economic benefits might be attainable from a complete reform of the system, and comparea the results of going to a pure income tax versus a pure expenditure tax.
Week 14_Lec 1 Introduction to Taxation.pptxnaseebkhan46
This document provides an overview of taxation. It defines tax as fees enforced by governments to fund activities. There are two broad categories of taxes: direct taxes on individuals/corporations like income tax, and indirect taxes on goods/services like sales tax. An ideal tax system has five characteristics - it is economically efficient, administratively simple, flexible, provides transparent political responsibility, and is fair. The document then discusses various effects of taxation like behavioral, financial, organizational, and general equilibrium effects. It also covers the concepts of distortionary versus nondistortionary taxation.
The Belgian Parliament passed a law granting greater fiscal autonomy to Belgium's three Regions regarding individual income tax. This includes: 1) A new regional additional tax levied by each Region on resident taxpayers; 2) Shifting specific tax reductions from federal to regional authority; 3) Applying regional tax systems to some non-resident taxpayers earning most income in Belgium. The law enables components of Belgium's Sixth State Reform to take effect in 2014, regionalizing aspects of the personal income tax system and impacting taxpayers.
A non-filer is someone who does not file a tax return by the required due date. They may be subject to penalties such as interest and late fees. The Federal Board of Revenue in Pakistan specified that non-filers will have their withholding taxes doubled under a new law. Withholding tax refers to a tax deducted from income payments by the payer and paid to the government on behalf of the recipient. It may be treated as a partial payment of the recipient's total tax liability.
The document discusses taxation as a tool for stimulating revenue generation in public sector organizations. It covers topics such as effectiveness and efficiency in tax collection systems, options for enhancing tax revenue like increasing tax rates and widening the tax base, the efficacy of tax incentives for economic development, and the impact of tax incentives on revenue generation and productivity. The document also examines prospects for strengthening collaboration between tax authorities and other stakeholders, as well as strategies for improving tax debt recovery. Overall, the presentation argues that taxation is crucial for revenue generation and that administration must be improved through best practices and tax justice to stimulate greater tax revenue.
Taxation serves four main functions: revenue raising, social/political, economic, and redistribution. The revenue raising function provides funding for government services. The social/political functions promote social equity and establish a relationship between citizens and the government. The economic functions can influence consumer behavior. The redistribution function aims to address wealth inequality through progressive taxation. Taxes are either proportional (flat rate), progressive (rates increase with the tax base), or regressive (rates decrease with the tax base). Direct taxes are paid directly by individuals/entities based on income/wealth, while indirect taxes are paid through consumption but the burden ultimately falls on consumers.
About 46% of American households will pay no federal income tax in 2011. Half of these households pay no tax due to basic exemptions and deductions in the tax code, while the other half pay no tax due to tax expenditures that eliminate their tax liability or provide refunds. The tax provisions that most significantly reduce tax liability for lower-income households are benefits for seniors and credits for children and the working poor. Middle-income households are most impacted by credits for children and education as well as itemized deductions. Higher-income households paying no tax benefit most from deductions and reduced rates on capital gains and dividends.
Governments use taxes to raise revenue and redistribute income through spending on public goods and services. The degree of redistribution depends on the type and progressivity of taxes. Progressive taxes place a higher burden on higher incomes, making them redistributive. Regressive taxes like indirect taxes place a higher burden on lower incomes. There are differing views on the appropriate role of taxes. Supply-side views favor lower taxes to incentivize work and investment, while demand-side views see taxes as a tool to manage the economy and achieve fairness.
Testimony -taxreform--pres budget commission5Urban Institute
The document discusses reforming taxes as part of overall budget reform. It outlines that tax reform involves dealing with the entire revenue side of the budget, including various taxes and tax subsidies that make up a significant portion of federal spending. The document also discusses the relationship between taxes and the budget, noting that most spending and tax programs are designed in a way that ensures permanent built-in growth, contributing to long-term budget deficits. It advocates for a comprehensive approach to tax and budget reform.
Taxes impact the economy through their effects on resource allocation, consumer behavior, and national productivity and growth. Taxes are directly related to supply and demand and affect incentives to save, invest, and work. An effective tax system aims to be equitable, simple, and efficient while adhering to principles like benefit received and ability to pay. The U.S. federal government collects most of its tax revenue from individual income taxes, Social Security and Medicare taxes, corporate income taxes, and excise taxes. State governments rely heavily on intergovernmental transfers and sales taxes, while local governments' primary sources are also intergovernmental transfers and property taxes.
The document discusses the design of the U.S. tax system. It describes the various taxes that raise revenue for the federal and state/local governments. The federal government collects most of its revenue from individual income taxes and payroll taxes, while state and local governments collect most from sales taxes and property taxes. The two main objectives in designing a tax system are efficiency and equity. Efficiency refers to minimizing the costs imposed on taxpayers, while equity concerns fair distribution of the tax burden.
01. introduction to taxation ICAB, KL, Study Manual
01. introduction to taxation ICAB, KL, Study Manual
01. introduction to taxation ICAB, KL, Study Manual
01. introduction to taxation ICAB, KL, Study Manual
This document provides an overview of taxation in India. It discusses various direct and indirect taxes collected by the central and state governments. Direct taxes include personal income tax, corporate income tax, and capital gains tax. Indirect taxes previously included excise duty, service tax, customs duty, and central sales tax. Recent reforms like GST have subsumed many indirect taxes. The document also explains concepts like tax deductions, tax collected at source, minimum alternate tax, and taxes on gifts, inheritance, wealth, securities transactions, and more.
This document provides information about taxation in Rwanda. It discusses Rwanda's history and challenges after the 1994 genocide. It then outlines Rwanda's taxation system, including the types of taxes collected like income tax, VAT, and excise taxes. It explains that tax revenues contribute 15.8% of Rwanda's GDP and discusses the purposes of taxation, including funding infrastructure, education, health, and social services. Finally, it discusses principles of taxation like ability to pay and benefit received, and how taxes can impact economic outcomes.
[4:55 p.m.] Bryan Oates
OJPs are becoming a critical resource for policy-makers and researchers who study the labour market. LMIC continues to work with Vicinity Jobs’ data on OJPs, which can be explored in our Canadian Job Trends Dashboard. Valuable insights have been gained through our analysis of OJP data, including LMIC research lead
Suzanne Spiteri’s recent report on improving the quality and accessibility of job postings to reduce employment barriers for neurodivergent people.
Decoding job postings: Improving accessibility for neurodivergent job seekers
Improving the quality and accessibility of job postings is one way to reduce employment barriers for neurodivergent people.
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"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
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1. 1
Public Economics 3
Summary notes: Black et al, Chapter 11
Income taxation
Learning objective
Define the comprehensive income tax base
Discuss the international principles of taxing income
Discuss why the personal income tax base differs from
the comprehensive income tax base
Explain what a progressive personal income tax is and
how progressiveness is achieved
Discuss the economic effects of personal income tax
Explain why companies are taxed separately
Define the company tax base
Describe the classical and fully integrated company
tax systems
Describe company tax in South Africa
Discuss the arguments for and against capital gains
taxation
2. 2
11.1 The comprehensive income tax base
Defining income on the uses (expenditure) side or sources
(revenue) side
Uses approach: Y = C + S
Sources approach: salary; wages; interest; capital gains;
rent; profits; royalties; dividends; gifts; employer
contributions to pension; unemployment benefits; income
in kind (comprehensive definition)
For administrative and other reasons govt taxes some
sources of income separately:
Personal income tax
Company tax (profits)
Capital gains tax (on the increase in the value of assets)
11.1.1 International taxation of income: the residence
vs. source principle
With countries becoming integrated, income flows more
freely across countries.
Tax authorities can deal with the international taxation of
income in two ways:
Residence of taxpayer principle: the country of
residence of the person/business who receives the
income collects the tax.
3. 3
Source of income principle: Income is taxed by
the country where the income is generated.
In practice, most countries apply a mix of the two. To
reduce double taxation countries may grant tax relief/tax
credit. Also countries enter bilateral tax agreements.
Countries need to consider:
- the source principle ensures that persons/companies that
make use of govt. expenditure on infrastructure and schools
etc also contribute to tax revenue (benefit principle)
- countries with low foreign income should use the source
principle for administrative simplicity. But where income
from investments abroad is high, one would want to use the
residence basis
- the source principle neutral with regards to capital
imports, and the residence principle neutral with regards to
capital exports.
In SA, taxation was based on the source principle. Due to
increased globalisation, from Jan 2001, residence based
system introduced.
It may contribute to equity as those with offshore income
will pay taxes. It also helps to curb losses as exchange
controls are relaxed.
But, administrative problems, problems of definition and
need to negotiate double tax agreements.
4. 4
11.2 The personal income tax base
See Box 11.1. Comprehensive definition of income is
broader than taxable income definition because of tax
expenditures/ loopholes: exclusions; exemptions;
deductions; rebates (credits)
5. 5
11.2.1 Exclusions
Income tax usually levied on cash income – some forms of
non-cash income are excluded:
Income in kind (e.g. accommodation of domestic
workers)
Imputed rent (for owner-occupiers)
Part of fringe benefits
Barter transactions (difficult to detect)
11.2.2 Exemptions
As a way of providing relief to poor and aged - exempt an
amount of income from tax. In 2005/06 R35 000 (<65) and
R60 000 (65>) (dealt with through rebate system –below)
Dividends and the first R15 000 of interest income are also
exempt.
11.2.3 Deductions
Pension (retirement annuity funds)
Medical aid and medical expenditures
Entertainment, travel (when used to produce income)
11.2.4 Rebates
Subtract from amount of tax to be paid – for everyone.
Primary rebate effectively reduces tax at threshold level to
zero ie. incomes of the poor become exempt from tax due
to rebate. In 2005/06, R6 300 (<65); R10 800 (>65)
6. 6
11.3 The personal income tax rate structure
11.3.1 Progressiveness in personal income taxation
Yardstick is the ability to pay but it’s not easy to
determine.
Adapt to personal circumstances? Tax married couples
jointly? Allowances for children?
In SA, until 1995, tax unit was the married couple – implies
discrimination against the wife. Margo and Katz
Commissions recommended the individual as the unit.
Progressivity is determined by looking at average tax rates
(amount of tax payable as a proportion of the taxable base).
Average tax rate increases as taxable income increases.
Progressivity in SA is achieved by using exemptions
(rebates) and taxing blocks of income/ brackets at different
rates. Graduated rates in blocks called marginal rates. See
Table 11.1, p. 164.
7. 7
11.4 Economic effects of personal income tax
Applying the criteria for a ‘good tax’ to personal income
tax
economic efficiency
equity
administrative efficiency
flexibility
11.4.1 Economic efficiency
Recall excess burden is a measure of inefficiency of a tax,
(burden over and above the normal burden of the tax).
General tax on income
The effect of a tax on all income is similar to that found in
Fig. 10.1 - an inward shift of the budget line (similar to a
head tax) – cannot avoid the tax if we assume leisure is
taxed at the same rate or ignored.
Relative prices remain the same and no excess burden
results.
Leisure cannot be ignored or easily taxed, however.
8. 8
Selective tax on income
Including leisure in the analysis results in personal income
tax having an excess burden. Workers have a choice
between income and leisure.
Because only income is taxed, and not leisure, personal
income tax is a selective tax - ‘distorts’ relative prices of
work and leisure.
Supply of labour affected - outcome indeterminate.
Depends on relative strengths of income and substitution
effects.
See Figure 11.1, p. 166.
9. 9
Assume Peter has 18 hours a day to spend on work or
leisure.
X axis: Left Right: measures leisure
Right Left: measures work
Y axis: income received from work
YL is his budget line at a wage rate of, say, R10 per hour.
Add indifference curves (which show Peter’s preferences)
and one can determine Peter’s preferred combination of
leisure and work at E0: work hrs =LQ0; leisure hrs =0Q0
Proportional/flat-rate tax on income (e.g. 30%)
After-tax budget line is BL. E0 E1
Welfare has declined and tax liability = E1G
Supply of hours increased to LQ1
Here the income effect dominates the substitution effect.
Income Effect:
Lower after-tax income cannot afford same Q of leisure,
causes Slabour to
Substitution Effect:
Changed relative prices of work and leisure
After-tax wage so opportunity cost of leisure falls
Dleisure increases, Slabour
10. 10
Can decompose movement from E0 to E1 into income
and substitution effects.
By hypothetically compensating Peter with an amount to
make him as well off as before the tax, budget line HJ
results.
E2 E1 = income effect
E0 E2 = substitution effect (consequence of change in
relative prices alone; opportunity cost of leisure falls)
Cannot tell a priori which effect will dominate.
Empirical evidence: supply elasticity close to 0 for prime-
age males; for married women, high and positive
Established so far: tax has income and substitution effects
that could cause Slabour to or
What about efficiency, i.e. is there an excess burden?
Need to compare the effects of a proportional tax to those
of a lump sum/head tax (which causes no excess burden).
Budget line DF (cuts BL at E1)
Equilibrium now at E3
Work hours to LQ3
Welfare (U1 to U2)
11. 11
Difference between U1 and U2 ascribed to excess burden
of a proportional tax that selectively taxes income.
A selective tax may lead to work effort, but not by as
much as a lump sum tax. Lump sum tax of equal yield
leads to even greater increase in Slabour.
Income taxes are therefore economically inefficient as
they distort relative prices.
Progressive tax on income
The average tax rate is equal to the marginal tax rate for a
proportional tax. For a progressive income tax, the
marginal rate is greater than the average rate.
See Box 11.2, p.166. Average rates determine the income
effect, marginal rates determine the substitution effect.
The adverse incentive effects due to the substitution effect
are likely to be greater for a progressive than a
proportional tax.
Lower marginal tax rates will increase work effort and
improve compliance (less incentive to cheat).
Consequence – a worldwide trend towards falling
marginal tax rates. SA has followed (in 1970s in SA
highest rate 72% - currently 40%).
12. 12
11.4.2 Equity
A progressive tax rate system adheres to the ability-to-pay
principle. But if the tax can be shifted, may compromise
equity objectives.
So, who ultimately bears the burden of the tax is NB.
If the supply curve is relatively inelastic e.g. for men
elasticity close to 0, then the burden is mainly on worker.
If the supply curve is more elastic, e.g. married women and
high-income (mobile) professionals, then the burden is
shared between worker and employer.
11.4.3 Administrative efficiency and tax revenue
To reduce administrative and compliance burden, SA has
implemented the Standard Income Tax on Employees -
SITE. No tax returns required below R60 000 pa.
Very small number of income taxpayers makes increasing
tax revenue difficult (about 5 million with incomes above
the threshold in 2004/05).
13. 13
Two approaches to increasing tax revenue (at a given level
of GDP):
1. Extending tax base
Lower tax rebates. Impact on poor?
Try to catch those in informal sector?
2. Reduce tax rates to increase total tax revenue (through
increased work effort)
See Laffer curve relationship Figure 11.2 on p.171.
Tax revenue highest at B. At A increase tax rate, at C
decrease tax rate to increase tax revenues. Critical question
is where are we on the curve?
14. 14
11.4.4 Flexibility
Personal income tax functions as an automatic stabiliser
(tax rises in upswing and falls in downswing)
On negative side – inflation erodes value of thresholds and
deductions and leads to bracket creep (when a person ends
up in a higher tax bracket because nominal income rises
regardless of what happens to real income). Tax brackets
also need to be adjusted.
Causes ‘fiscal drag’ – dampening effect on the economy of
higher tax revenues caused by bracket creep, e.g. by
reducing size of deficit or pushing budget into surplus
when deficit would be appropriate.
15. 15
11.5 Company taxation
Reasons for taxing companies separately:
Companies are a separate legal entity.
Company receive ‘benefits’ from govt – therefore
should be taxed according to the benefit principle
If companies are not taxed, shareholders could limit
personal income tax by retaining profits in the
company. Taxing companies therefore limits
avoidance. Fair from ability-to-pay perspective.
Addresses imperfect competition issue by taxing
excess profits of oligopolies and monopolies – helps
correct market failures
Useful for achieving other government policy
objectives such as promoting investment (through the
manipulation of rates and providing incentives)
Administration is simple and it generates large
revenues
Avoids revenue loss to foreign investors repatriating
profits to their home countries (through double-
taxation agreements, the home country credits
taxpayers with the amount taxed in the host country to
avoid double taxation)
16. 16
Company taxation is a significant but declining source of
revenue in SA.
Reasons:
As economy develops, tax base can be broadened,
shift to – personal income and consumption based
taxes
Other factors that reduce profit margins, e.g. wage
costs, imports costs, debt finance charges
Exemptions, avoidance and evasion
Falling mining revenues
11.6 The company tax structure
11.6.1 The company tax base
Taxable Income = total receipts/revenue less
allowable expenses/costs
11.6.2 Types of company tax
2 types:
Classical system/ partnership approach
Company and shareholders (dividends) are both taxed.
Leads to a double-tax of dividends (first as profit, then as
income of shareholders).
17. 17
Full Integration System
Other extreme - all company income taxed in hands of
shareholders. Company tax acts as withholding tax –
credited at shareholder level.
SA used modified classical system prior to 1990 (with a
certain proportion of dividends excluded from taxation). In
1990 all dividends became tax-exempt.
In 1993 modified again to reduce rate without undue
revenue loss and to encourage companies to finance
themselves.
A dual tax rate was introduced
(i) Basic tax: proportional tax, (40% in 1993; in 2005
29%) on all retained profits (i.e. profits not paid out in
dividends)
(ii) Secondary tax on companies (STC): introduced in
1993, levied on distributed profits/dividends (25% in
1994; lowered to 12.5% in 1996)
Some tax relief for small and medium-sized businesses -
SMMEs important for job creation.
The company tax structure can lower or raise the user cost
of capital and hence the decision to invest or not. Tax
incentives (e.g. allowances for R&D/training) are used in
many developing countries to attract investments to
particular regions, sectors, industries.
18. 18
11.8 Capital gains tax
Capital gains – increases in the net value of assets over a
period.
They can be taxed when they accrue or when they are
realised.
Currently capital gains are taxed in a number of developed
countries as well as in some developing countries.
On 1 Oct 2001, SA implemented a capital gains tax (CGT).
Levied when there is a change in the ownership of an asset,
i.e. when capital gains are realised.
For individuals, effective rate from 0 to 10%. For
companies, 0 to 14.5%. Other exemptions and allowances.
Revenue from CGT in SA will not be very large (about 1%
of total tax revenue).
Reasons for CGT:
Protect the integrity of the personal income tax
base. Otherwise incentive to convert income into
capital gains to avoid taxation.
Ensure horizontal equity. A capital gain represents an
increase in economic power, ability to earn income.
Ensure vertical equity. Capital gains generally accrue
to higher-income earners.
Improve economic efficiency. So investment
decisions are not made to avoid taxation.
19. 19
Arguments against CGT:
Administrative problems. E.g. valuing assets (less
problematic when tax is on realised gains).
If nominal profits are taxed, equity is risked. Inflation
causes imaginary capital gains. Need to deflate with a
suitable price index – further complication.
Lock-in effect can affect investment negatively,
taxpayers tend to lock in rather than realise
investments