Lecture Notes on Government Intervention and Taxation

Flashcards about Reasons for Government Intervention, Sources of Tax Revenue, Challenges in Boosting Government Revenue, Discussion on Taxing the Rich More Than the Poor

Market Failures

Reasons for Government Intervention - externalities, public goods

Income Inequality

Reasons for Government Intervention - Economic disparity among individuals or groups in a society

Economic Instability

Reasons for Government Intervention - recessions

Information Asymmetry

Reasons for Government Intervention - Situation where one party has more or better information than the other.

Provision of Public Services

Reasons for Government Intervention - Governments provide services to its citizens.

Limited Information

Constraints To Government Intervention - Government actions can be restricted due to lack of information.

Administrative Costs

Constraints To Government Intervention - The expenses associated with implementing and managing government programs.

Political Influence

Constraints To Government Intervention - Impact of special interests on government decisions.

Unintended Consequences

Constraints To Government Intervention - Unexpected and often adverse outcomes of government policies.

Regulatory Capture

Constraints To Government Intervention - When regulatory agencies are unduly influenced by the industries they regulate.

Petroleum Profit Tax (PPT)

Sources of Tax Revenue in Nigeria - tax on profits from petroleum activities

Company Income Tax (CIT)

Sources of Tax Revenue in Nigeria - tax on the profits of companies

Value Added Tax (VAT)

Sources of Tax Revenue in Nigeria - Consumption tax added to a product's value at each stage of the supply chain

Personal Income Tax (PIT)

Sources of Tax Revenue in Nigeria - Tax levied on an individual's income

Customs and Excise Duties

Sources of Tax Revenue in Nigeria - Taxes on imported and exported goods, and on the production or sale of certain goods within a country

Tax Evasion and Avoidance

Challenges In Boosting Government Revenue In Nigeria - Illegal and legal (but unethical) ways to reduce tax liability.

Corruption

Challenges In Boosting Government Revenue In Nigeria - Dishonest or fraudulent conduct by those in power.

Weak Tax Administration

Challenges In Boosting Government Revenue In Nigeria - Inefficient tax collection and enforcement.

Informal Sector Activities

Challenges In Boosting Government Revenue In Nigeria - Economic activities that are not officially recorded or regulated.

Economic Instability

Challenges In Boosting Government Revenue In Nigeria - Fluctuations in economic conditions that affect revenue collection.

Disincentive to Wealth Creation

Arguments Against Progressive Taxation - Idea that high taxes on the wealthy might reduce their motivation to invest, innovate, and create jobs.

Violation of Property Rights

Arguments Against Progressive Taxation - Claim that high taxes on the rich infringe upon their right to enjoy their labor and property.

Economic Inefficiency

Arguments Against Progressive Taxation - Idea that high tax rates can lead to tax avoidance and capital flight, causing economic inefficiencies.

Redistribution of Wealth

Justification for Progressive Taxation - Helps redistribute wealth from the rich to the poor, reducing income inequality and promoting social equity.

Funding Public Services

Justification for Progressive Taxation - Higher taxes on the rich can provide revenue to fund essential public services, benefiting society.

Addressing Income Inequality

Justification for Progressive Taxation - Progressive taxation can help address the growing income inequality, which can lead to social and economic problems.

Fairness and Social Justice

Justification for Progressive Taxation - Belief that those who have benefited most from the economic system should contribute more through higher taxes.

Stabilizing the Economy

Justification for Progressive Taxation - Progressive taxation can act as an automatic stabilizer, helping to moderate economic fluctuations.