Exercise 8. Read and translate the text

Unit 1

TAXES

Vocabulary

Exercise 1. Study the vocabulary:

Taxpayer – платник податків

financial charge – фінансове стягнення

punishable – той, що підлягає покаранню

percentage rate of taxation – процентна ставка оподаткування

revenue – 1) надходження до бюджету, 2) прибуток

sales taxes – податок з продажу

property taxes - податок на власність

tangible property – матеріальні активи

intangible property – нематеріальні активи

proportional tax - пропорційний податок

progressive tax – прогресивний податок

to impose/levy a tax – обкладати податком

to collect taxes – стягувати податки

Ability-to-Pay Principle — принцип платоспроможності

Benefit Principle — пільговий принцип

еxpenditure, spending – витрати

fines - штрафи

penalties – покарання

yield – приносити

clarity – прозорість

enforcement staff – співробітники відповідних органів

fairness – чесність

derived – отриманий

value added tax – податок на додану вартість

favor – підтримувати

evade – ухилятися

mortgage – заставна

income tax – податок на прибуток

tax assessor – податковий експерт

merchant – комерсант

book-keeping costs – бухгалтерські витрати

II Reading

Exercise2. Read and translate:

 

 

Text A

To tax (from the Latin taxo; "I estimate) is to impose a financial charge upon a taxpayer (an individual or legal entity) by a state such that failure to pay is punishable by law.

The main purpose of taxation is revenue: taxes raise money to spend on roads, schools and hospitals, and on more indirect government functions like market regulation or legal systems. This is the most widely known function. A second is redistribution. Normally, this means transferring wealth from the richer sections of society to poorer sections.

In modern taxation systems, taxes are levied in money. The method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics. Tax collection is performed by a government agency. When taxes are not fully paid, civil penalties (such as fines) or criminal penalties may be imposed on the non-paying entity or individual.

There are three types of taxes according to the method of taxation in the United States: proportional, progressive and regressive. A proportional tax is one that imposes the same percentage rate of taxation on everyone, no matter what their income. Even when income goes up, the percent of total income paid in taxes does not change. A progressive tax is one that imposes a higher percentage rate of taxation of people with high incomes than on those with low incomes.

A regressive tax is one that imposes a higher percentage rate of taxation on low incomes than on high incomes. For example, a person with a yearly income of $10,000 may spend $3,000 on food, clothing and medicine, while a person with a yearly income of $100,000 may spend $20,000 on the same essentials. If the state sales tax, which is a regressive tax, were 4 per cent, the person with the lower income would pay a lesser amount in dollars but a higher percentage of total income.

In order to have an effective tax system, government must have criteria or standards. One such criterion is that a tax yields enough revenue. A second criterion is clarity. Tax laws should be written so that both the taxpayer and tax-collector can understand them. This is not an easy task but people seem to be more willing to pay taxes, when they understand them. A third criterion is ease of administration. A tax should be easy to collect. It should not require a large enforcement staff, and it should be designed so that citizens find it hard to avoid. This criterion also includes convenience and efficiency. That is the tax should be administered at the lowest possible cost. A final criterion is fairness. Taxes should be imposed justly. However, this is hard to do because people do not always agree about what is or is not fair when it comes to taxes.

In general taxes are based chiefly on two principles: the Benefit Principle and the Ability-to-Pay Principle.

The Benefit Principle of taxation is based on two ideas. First, those who benefit from government services should be the ones to pay for them. Second, people should pay taxes in proportion to the amount of services or benefits they receive.

The Ability-to-Pay Principle of taxation says that people should be taxed according to their ability to pay, no matter what benefits or services they receive. This principle is based on three things. First it is not possible to measure benefits, derived from government spending. Second, people with higher incomes suffer less discomfort than people with lower incomes even if they pay higher taxes. Finally, the only means most people have of paying taxes is the income they earn. So the main basis for distributing taxes is income.

III. Language

Exercise 1. Find in the text and put down English equivalents to the following word combinations:

Накладати фінансове стягнення; витрачання стягнених податків; юридична чи фізична особа,що не сплачує податки; ефективна податкова система; платник податків; розподіл податків; дохід; витрати; платити податки; з найменшими можливими витратами; принцип платоспроможності; отримувати пільги від уряду; пільговий принцип оподаткування.

 

Exercise 2. Fill the blanks with the suitable words:

 

1. … is to impose a financial charge upon a taxpayer (an individual or legal entity) by a state.

(to pay taxes, to tax, to distribute taxes)

2. The government… of taxes raised is often highly debated in politics and economics

(collection, expenditure, administration)

3. A proportional tax is one that imposes the same percentage rate of taxation on everyone, no matter what their…

(activity, income; sources of funds)

4. People should pay taxes in proportion to the amount of … they receive.

(credits, services or benefits; income)

5. Tax laws should be written so that both the taxpayer and … can understand them

(tax assessor, tax-collector, government)

 

Exercise 3. Make up the possible word combinations out of the following and translate them:

 

Tax Government Legal Benefit Regressive Direct percentage

Tax laws principle rate collection expenditure entity agency

 

Exercise 4. Match the definitions to the economic terms in the left column:

 

regressive tax redistribution Ability-to-Pay Principle of taxation to tax proportional tax fines progressive tax

a). to impose a financial charge upon a taxpayer; b). a tax imposing the same percentage rate of taxation on everyone; c). a principle which declares that people should be taxed according to their ability to pay; d). a tax imposing a higher percentage rate of taxation of people with high incomes than on those with low incomes. e). a tax imposing a higher percentage rate of taxation on low incomes than on high incomes f). civil penalties g). transferring wealthfrom the reachersection of society to poorer sections

 

 

IV. Text understanding

Exercise 5. Find in the text and translate a passage describing:

1. definition of the word “to tax”
2. progressive tax
3. four criteria of an effective taxation system
4. the Benefit Principle of taxation.

 

Exercise 6. Agree or disagree with the statements:

1. In modern taxation systems, taxes are levied in money.
2. Tax collection is performed by a non-government agency.
3. The method of taxation and the government expenditure of taxes raised is not debated in politics and economics.
4. There are two types of taxes in the United States.
5. One of the most important criterion of taxation is that a tax yields enough revenue.
6. The Benefit Principle of taxation says that people should be taxed according to their ability to pay.
7. Since the benefits of government services to individuals are hard to measure, the other basis for distributing taxes is income

 

Exercise 7. Answer the questions:

1. What does “to tax” mean?
2. What happens when taxes are not fully paid?
3. What is the difference between proportional, progressive and regressive tax?
4. What standards must government have to make taxation system effective?
5. What two ideas is the Benefit Principle of taxation based on?
6. What three things are fundamental for the Ability-to-Pay Principle of taxation?

Exercise 8. Read and translate the text.

Text В

VAT

For a number of industrial nations, the value added tax (VAT) is an important source of revenue. VAT is paid every time value is added to a good as it moves along the chain of production. Although there is no value added tax in the United States at the present time, there are those who favor its use. In support of their position, they make the following points:

· Since the VAT is paid at each stage of production, it is relatively easy for the government to collect and difficult to evade.

· Since all business transactions would be subject to the VAT, it can generate a lot of revenue.

· Because the tax is hidden from the consumers, who really pay it, there is likely to be less public opposition to it.

 

Those opposing the VAT argue that:

· It is regressive. Like any sales tax, it falls more heavily on the poor than on the rich taxpayer.

· Hidden taxes are unfair taxes. The VAT is inflationary because it increases prices (by the amount of the tax).

Income tax

Income tax is a tax paid on income. It is paid by employees and people who are self-employed. It may also be payable if you aren't working if, for example, you have an income from a pension or savings. Not all types of income are taxable and it will seldom be the case that all of your income is taxed. There is no minimum age at which a person becomes liable to pay income tax. What matters is the amount of your taxable income. If this is below a certain level, no tax is payable. Income is taxed at different percentage rates, depending on the amount of taxable income and the source of the income. These rates are announced in the Budget every year.

Property Taxes

A major source of revenue is the property tax — a tax on real property and tangible or intangible personal property. Real property includes land, buildings and anything else permanently attached to them. Tangible property is all tangible items of wealth not permanently attached to land or buildings, such as furniture, automobiles, the stock of goods in retail stores and clothing. Intangible personal property includes stocks, bonds, mortgages, and bank accounts.

The main problem with personal property as a source of revenue is that many items are not always brought to the attention of the tax assessor — the person who places value on property for tax purposes. Because of this, many things that should be taxed never are. Another problem is that some property is very hard to evaluate fairly.

 

Sales Taxes

A sales tax is a general tax levied on consumer purchases of nearly all products. It is added to the final price paid by the consumer.

For the most part, sales taxes are collected by individual merchants at the time of the sale and are turned over weekly or monthly to the proper government agency. Most states allow merchants to keep a small portion of what they collect to compensate for their time and book-keeping costs.

The sales tax generally is a very effective means of getting revenue for states and cities.

 

 

Exercise 9. Match the word combinations in column A with their equivalents in column B:

 

A	B
1). Джерело доходів 2). податок на додану вартість 3). стадія виробництва 4). суспільне протистояння 5). особиста власність 6). справедливо оцінити 7). податковий експерт 8). споживчі покупки 9). відповідна урядова установа 10). ефективний засіб 11). податок з продажу	a). sales tax b). tax assessor c). public opposition d). proper government agency e). consumer purchases f). stage of production g). value added tax h). personal property i). source of revenue j). evaluate fairly k). effective means

 

Exercise 10. Define the terms by definitions:

1.the person who places value on property for tax purposes

2. general tax imposed on consumer purchases

3. a tax on tangible or intangible personal possessions.

4. a tax paid every time when value is added to a good as it moves along the chain of production

5. increasing prices

6. a tax on revenue imposed at different percentage rates

 

Exercise 11. Fill in the table:

Name of tax	Subject of taxation	Advantages	Disadvantages