Ex.1Choose the proper heading for each paragraph.
......... Advantages and disadvantages of different tax systems
......... Avoiding tax on profits
......... Avoiding tax on salaries
......... Tax evasion
......... The functions of taxation
TAXATION (AND HOW TO AVOID IT)
A The primary function of taxation is, of course, to raise revenue to finance government expenditure, but taxes can also have other purposes. Indirect excise duties, for example, can be imposed to dissuade people from smoking, drinking alcohol, and so on. Governments can also encourage capital investment by permitting various methods of accelerated depreciation accounting that allow companies to deduct more of the cost of investments from their profits, and so reduce their tax bills.
B There is always a lot of debate as to the fairness of tax systems. Business profits, for example, are generally taxed twice: companies pay tax on their profits (corporation tax in Britain, income tax in the USA), and shareholders pay income tax on dividends. Income taxes in most countries are progressive, and are one of the ways in which governments can redistribute wealth. The problem with progressive taxes is that the marginal rate - the tax people pay on any additional income - is always high, which is generally a disincentive to both working and investing. On the other hand, most sales taxes are slightly regressive, because poorer people need to spend a larger proportion of their income on consumption than the rich.
C The higher the tax rates, the more people are tempted to cheat. There is a large 'black' or 'underground' economy nearly everywhere. In Italy, for example, self-employed people - whose income is more difficult to control than that of company employees - account for more than half of national income. Lots of people also have undeclared, part-time evening jobs (some people call this 'moonlighting') with small and medium-sized family firms, on which no one pays any tax or national insurance. In 1986, the Director of the Italian National Institute of Statistics calculated the size of the underground economy and added 16.7% to Italy's gross national product (GNP) figure, claiming that Italy had overtaken Britain and became the world's fifth largest economy
DTo reduce income tax liability, some employers give highly-paid employees lots of perks or benefits instead of taxable money, such as company cars, free health insurance, and subsidized lunches. Legal ways of avoiding tax, such as these, are known as loopholes in tax laws. Life insurance policies, pension plans and other investments by which individuals can postpone the payment of tax, are known as tax shelters. Donations to charities that can be subtracted from the income on which tax is calculated are described as tax-deductible.
E Companies have a variety of ways of avoiding tax on profits. They can bring forward capital expenditure (on new factories, machines, and so on) so that at the end of the year all the profits have been used up; this is known as making a tax loss. Multinational companies often set up their head offices in countries such as Liechtenstein, Monaco, the Cayman Islands, and the Bahamas, where taxes are low; such countries are known as tax havens. Criminal organizations, meanwhile, tend to pass money through a series of companies in very complicated transactions in order to disguise its origin from tax inspectors - and the police; this is known as laundering money or money laundering.
Ex. 2 Memorize the words.
accumulate аккумулировать, накапливать
annual ежегодный, годовой
assess оценивать, давать оценку
authorities органы власти
banking secrecy тайна банковских операций
burden бремя, груз, тяжесть
charity благотворительность, милостыня
drug traffic торговля наркотиками, наркотрафик
embezzle растрачивать или присваивать чужие деньги
fraud мошенничество, жульничество, обман
head office головной офис
improve улучшать
inflow (=influx) приток, наплыв
investigation расследование, следствие
impose (=levy) облагать (налогом), налагать (штраф)
law закон
law enforcement обеспечение правопорядка, применение закона
legal entity юридическое лицо
origin происхождение, начало, источник
poor бедный, малоимущий
rich богатый, состоятельный
self-employed самозанятый, работающий не по найму
source источник
submit представлять на рассмотрение, подавать
supervision надзор, наблюдение, контроль
tax-deductible исключаемый из налогооблагаемой суммы treaty договор, соглашение, конвенция
Ex. 3Find pairs of synonyms in A and B.
A: primary, raise, purpose, introduce, self-employed, perk, set up;
B: objective, benefit, first, collect, establish, freelance, impose.
Ex. 4 Find pairs of antonyms in A and B.
A: revenue, dissuade, encourage, deduct, progressive, complicated;
B: discourage, regressive, expenditure, simple, persuade, add.
Ex. 6 Match up the words from A and B.
A: raise, accelerated, underground, part-time, health, capital;
B: economy, revenue, expenditure, depreciation, insurance, job.
Ex. 7Are the following statements TRUE or FALSE?
1 Taxes can be levied both to discourage and to encourage spending.
2 The same amount of money can be taxed more than once.
3 Progressive taxes may discourage people from working extra hours.
4 Sales taxes are unfair because poor people spend more than the rich.
5 The Italian government knows that about one seventh of national income escapes taxation.
6 'Loopholes' are a common form of tax evasion.
7 If you pay a lot of income into a pension fund or a life insurance policy you never have to pay tax on it.
8 A company making an unusually large profit during a tax year may decide to spend it, for example, on a new factory or equipment.
Ex. 8Find words in the text that mean the following.
1 reducing the value of a fixed asset, by charging it against profits
2 something which discourages an action
3 spending money to buy things, rather than saving it
4 working for yourself, being your own boss
5 a tax on incomes that pays for sickness benefit, unemployment benefit, and old-age pensions
7 non-financial benefits or advantages of a job
8 a way to delay the payment of tax to a later time
9 which can be taken away from taxable income or profits
10 a country offering very low tax rates to foreign businesses
Ex. 9 Choose the proper terms for the definitions.
1 The tax people pay on their wages and salaries is called
A capital transfer tax B income tax C wealth tax
2 A tax on wages and salaries or on company profits is a/an
A direct tax B indirect tax C value-added tax
3 A tax levied at a higher rate on higher incomes is called a
A progressive tax B regressive tax C wealth tax
4 A tax paid on property, sales transactions, imports, and so on is a/an
A direct tax B indirect tax C value-added tax
5 A tax collected at each stage of production, excluding the already taxed costs from previous stages, is called a/an
A added-value tax B sales tax C value-added tax
6 The annual tax imposed on people's fortunes is a/an
A added-value tax B capital gains tax C wealth tax
7 Making false declarations to the tax authorities is called
A fiscal policy B tax avoidance C tax evasion
8 Reducing the amount of tax you pay to a legal minimum is called
A creative accounting B tax avoidance C tax evasion
Ex. 10 Answer the following questions.
1. What is the purpose of taxation?
2. How are progressive taxes imposed?
3. How are regressive taxes imposed?
4. Why are people tempted to cheat?
5. How do employers reduce income tax liability?
6. How can companies avoid taxation?
7. How can companies evade taxation?
Ex. 11Prepare a brief speech or a written report giving arguments BOTH in defence of and against taxation and government spending.