TAXATION POLICY

There are many tax regimes in the world, with the rules for individuals and companies tailored to meet local conditions. Taxation is extremely complex, and here we can only outline the most general principles.

The money gathered in from taxes is usually a government's main source of revenue. Money is also raised from the issue of government securities and national saving schemes. The amount of money the government requires depends on its policy. In broad terms, governments on the left tend to help the disadvantaged sections of the society Governments on the right are little involved in the lives of individuals and free market pre­dominates in this situation. In consequence, left-wing govern­ments generally need higher revenues than those on the right.

Sweden, for example, has one of the highest levels of social security, protecting its citizens in many areas of life. At the same time Swedes have one of the highest standards of living in the world, though they face one of the heaviest levels of taxation. The tax burden on the individual in most Western countries appears to have fallen in the past decade, but it is important to recognize that some cuts are more apparent than real. In the UK, for instance, direct taxes on income have been cut substantially, but indirect taxes on spending, such as Value Added Tax (VAT), have risen to compensate it. Thus, the way in which the taxes are collected may have changed but the government's overall tax take has not been reduced.

Taxation policy may also reflect socially desirable and unde­sirable priorities in society. Interest on savings may be tax-free to encourage thrift. Contributions to charity may also be tax-free while other transfers of capital may be subject to tax. Smoking and drinking may be discouraged by having high levels of tax imposed on them. Car ownership may be restricted by high sales taxes or duties on petrol. Each country has its own priorities.

No taxes are popular, but most people agree that they are necessary. By transferring some resources to a central pool, communal projects for the common good can be paid for. Ideally, individuals and companies contribute according to their ability and collect according to their need.

The main kinds of tax can be divided roughly into four groups: direct taxes on incomes; indirect spending taxes on individuals; taxes on wealth and company taxes.

(from "Guide to International Finance. Understanding Money Today” by Alen M.)

I. Answer the following questions:

1. Why is taxation so complex and different in different countries?

2. Why are taxes imposed?

3. What are the sources of a state revenue?

4. What kind of governments usually require more money?

5. What country in the EU has one of the highest levels of social security and the heaviest level of taxation?

6. What does this country have as a result of it?

7. Why have indirect taxes on spending risen in the EU in the past decade?

8. Has the government's overall tax take changed in the UK in the past decade?

9. What can taxation policy reflect?

10. How are things encouraged and discouraged by taxation policy?

II. Match English words and word combinations from column (a) with Russian words from (b) below:

a	b
standard of living	налоговые сборы
level of tax	налог на расходы
tax revenue	уровень жизни
set against tax	ставка налога
sales tax	делать налоговый вычет
tax on spending	налоговая гавань
tax haven	косвенный налог
cut taxes	общая сумма собранных налогов
local tax	снижать налоги
indirect tax	подлежащий налогообложению
subject to tax	уровень налога
tax rate	налог с продаж
overall tax take	местный налог

III. Find in the text and write out English equivalents for the following Russian word combinations:

Снижать прямые налоги на доходы; облагать высоким налогом; соответствовать местным условиям; отражать приоритеты; снижать общую сумму налога; определить наиболее общие принципы; подлежать налогообложению; общественные проекты на общее благо; быть ограниченным из-за высоких налогов; поощрять накопление.