Role of the Government Flashcards
(15 cards)
What is the Government
A system or group of people with the power and authority to control and direct the affairs of a country.
What are the functions of a Government
I. Provide law, order and defense
II. Provision of Social Services
III. Protection of environment
IV. Control of the economy
What are the ways in which the government raise revenues
Profits earned from the operations of nationalized industries.
Sale of government assets
Taxation
Borrowing money both from local and international sources
What are the ways in which the government influences business to protect the environment
Green technology-provide incentives for firms to use environmentally friendly machines that reduce
emissions
ii. Reafforestation-hiring citizens to replant trees in the forest.
iii. Zoning laws- regulations passed to prevent commercial activities from occurring in protective
areas.
iv. Waste disposal-strengthen laws preventing forms from dumping waste
What is a tax
Taxation is the main way governments of countries raise revenue.
A tax is a compulsory payment to a government.
What are the reasons for taxation
1.To raise revenue to help to pay for the running of the government
- To provide social services which are services used to improve the standard of living of a
country such as health care. - To redistribute the wealth of a country by taking more from the rich and providing grants and
other forms of relief to the poor. - To control the economy of the country via reduction of inflation and unemployment.
What are the rules of a taxation system
It should
easy to collect and calculate.
Equality of sacrifice or taxes should be based on one’s ability to pay.
Benefit the economy
It must be charged at a time when taxpayers can afford.
What are the forms of taxation[ways taxes can be charged]
Proportional: in the form every tax payer will pay the same proportion of their income in taxes
e.g. national insurance.
Progressive: the more income one earns the higher is the rate of taxation e.g. income tax.
Regressive: the burden of the tax would fall more on the poor than on the rich e.g. Value added
tax.
What are the types of taxes
Direct taxes
Indirect taxes
What is direct taxes
These are taxes where the burden and the payment of them fall on the same individual. Thus they
are taxes on income. The main types of them include:
Income tax: a tax on working persons pay.It is based on the pay as you earn system of PAYE thus
the more income one earns the progressively higher would be the tax.
Corporation tax: a tax on the profits of firms.
Capital gains tax: a tax on the gains made from the sales of capital goods e.g.: land
Capital transfer tax: a tax on t he free transfer of capital goods e.g.: land
Estate duty: a tax on the assets left by deceased persons.
What is indirect taxes
These are taxes where the burden of the tax and the payment of tax fall on different person.
They are levied on goods and services. The main types are:
Custom duty/tariff: a tax on imported items.
Excise duty: a tax on goods exported.
Stamp duty: a tax on the services provided by government departments.
Purchase tax: a tax on items bought by consumers.
Value added tax: a tax on items produced at each stage in the production process
What is social services
Services provided by the government for the benefit of the community
What are some social services
Health care
Education
Infrastructure
Housing
National insurance
What are ways Government assist businesses
Subsidies and grants
Training and human resources development
Research and information centers
How do businesses benefit the Government
-employment
-earn foreign exchange
-reduce import level
- Satisfy needs and wants
