Question

In: Economics

Task 1: a) Explain the meaning of taxation and various types of taxes and classification of...

Task 1:
a) Explain the meaning of taxation and various types of taxes and classification of taxation. You must consider the UK rule while explaining this question.

b) “Taxation is very much required for the economic development of the country; to protect the environment and to reduce the gap between rich and poor”
Using above, Illustrate and Critically evaluate the purpose of taxation.

Solutions

Expert Solution

Answer 1 .Taxation is the process by which the govt. implies taxes on the citizens or business entities of its country . The taxes are the largest source of income of govt. of a country .

There are two categories of taxes :

Direct tax- It is a direct tax and it is applied directly on a individual or a business.

Indirect tax- It is received from the business or individual indirectly , such as VAT ETC.

Types of taxes :

Income tax- Income tax is applied on the income of the citizens of a country or A tax which is applied on the earning people of a country .

Below table shows the tax brackets for 2020/21.

Tax band Taxable income Rate
Personal allowance up to £12,500 0%
Basic rate £12,501 to £50,000 20%
Higher rate £50,001 to £150,000 40%
Additional rate over £150,000 45%

Excise duty on alchohal products , tobacoo products and other related products.

Tax on corporations or profits of businesses.

Taxes on buying property or selling .

Taxes on purchasing shares of any firm.

Taxes on goods purchased by any citizens .

Answer 2. As i said before taxes provide a large amount of income to the government of any country which benefits the citizens and environment of a country in return . The govt. uses the money collected by taxes to develop the infrastructure of the country by building roads , dams , wildlife centuries , parks , buildings which benefits the citizens of the country . Taxes reduce the gap between rich and poor as mostly taxes are applied on behalf of the income of a person as if the person is earning less he has to pay less or no tax to the govt . but if the person is earning a lot of money he had to pay a lot of tax .

If still u have any difficulty in the question let me know and i will edit the answer ASAP , please leave a upvote :)


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