Exercise 1.Match the following terms (1 – 8) with the correct definition (a – h) on the right.
| 1. taxation 2. direct tax 3. indirect tax 4. value-added tax 5. corporation tax 6. income tax 7. sales tax 8. excise duty | a) a form of indirect tax which is incorporated into the selling price of a product and which is born by the consumer; b) the compulsory contribution of money to the government; c) an indirect tax levied by the government on certain goods, most notably tobacco, oil and alcoholic drink; d) a direct tax levied on the income (wages, rent, dividends) received by housholds; e) a tax that is levied on individuals and corporations; f) an indirect tax levied at each stage of the production cycle or at the sale of consumer goods; g) a tax levied on goods and services; h) a direct tax levied on the profits axxruing to businesses. |
Exercise 2.All the words below can be combined with tax or taxation in two-world partnership. Add tax and/or taxation before or after the following words:
| 1. ... accounting ... 2. ... allowance ... 3. ... authority ... 4. ... avoidance ... 5. ... consultant ... 6. ... corporation ... 7. ... deductible ... 8. ... direct ... 9. ... evasion ... 10. ... free ... 11. ... haven ... 12. ... income ... 13. ... indirect ... | 14. ... inspector ... 15. ... loophole ... 16. ... loss ... 17. ... payer ... 18. ... progressive ... 19. ... rates ... 20. ... rebate ... 21. ... regressive ... 22. ... return ... 23. ... rates ... 24. ... shelter ... 25. ... withholding ... 26. ... year |
Exercise 3.Use the correct form of the verbs in the box in the sentences below:
| avoid levy | be liable lower | deduct pay | evade raise |
1. If you inherit a lot of money, you … for capital transfer tax.
2. In some countries, employers have to … tax from your pay and … it direct to the tax authorities, so employees have no possibility of … income tax.
3. Some people hire expensive accountants to tell them how to … taxes – legally, of course!
4. The government always tries to … taxes in the year before elections.
5. The government has a huge deficit and is going to have to … either the rate of VAT or income tax.
6. The government … special taxes on petrol, alcohol and tobacco.
Exercise 4.Choose the correct words to complete each sentence:
1. The tax on wages and salaries is called … . In Britain the tax on business profits is called corporation tax.
| a) direct tax | b) income tax | c) wealth tax |
2. A tax that is levied at a higher rate on higher incomes is called a … tax.
| a) progressive | b) regressive | c) value-added |
3. Property taxes, sales taxes, customs duties on imports, and excise duties on tobacco, alcoholic drinks, petrol, etc. are … taxes.
| a) direct | b) indirect | c) value-added |
4. Most sales taxes slightly … because poorer people need to spend a larger proportion of their income on consumption than the rich.
| a) progressive | b) regressive | c) repressive |
5. A sales tax collected at each stage of production, excluding the already-taxed costs from previous stages, is called a …
| a) sales tax | b) value-added tax | c) added-value tax |
6. Profits made from the sale of assets are liable to a … tax.
| a) capital gains | b) capital transfer | c) wealth |
7. Gifts and inheritances are usually liable to … tax.
| a) capital gains | b) capital transfer | c) wealth |
8. Reducing the amount of tax you pay to a legal minimum is called …
| a) fiscal policy | b) tax avoidance | c) tax evasion |
9. Making false declarations is called … and is obviously illegal.
| a) creative accounting | b) tax avoidance | c) tax evasion |
10. Bringing forward capital expenditure so that at the end of the year all the profits have been used up is known as making a …
| a) mistake | b) tax haven | c) tax loss |
11. Multinational companies often set up their head offices in low-tax countries such as Liechtenstein, Monaco, the Cayman Islands, and the Bahamas, known as
| a) tax havens | b) tax heavens | c) tax shelters |
12. Criminal multinationals such as the Mafia 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 … money.
| a) cleaning | b) laundering | c) washing |
Exercise 5.Comment the following statements:
1. Profitable and unprofitable firms are taxed alike.
2. Income tax returns are the most imaginative fiction being written today.
3. Only rich should be taxed.