Copy of Taxation quizlet

Taxation:

Taxation, is a compulsory payment made to the government by individuals and organisations that earn an income, purchase goods and services and own property.

Direct Tax, is a tax paid directly to the revenue and is based on how much you earn.

  • Income tax, is a tax on a person’s work earnings.
  • PAYE (Pay as you earn), is the name of the Irish system used to collect income tax from employees’ gross pay.
  • Universal Social Charge (USC), is an additional tax payable on gross income.
  • PRSI, is a compulsory insurance payment to the state. Employees will be paid a sum of money each week if they become unemployed, ill, reach pension age.
  • Corporation tax, is a tax paid by companies on their profits. In Ireland this tax is 12.5%
  • DIRT (Deposit Interest Retention Tax), is automatically deducted from all interest earned on savings.
  • Capital Gains Tax (CGT), is paid on profits earned from the sale/disposal of an asset.
  • Capital Acquisitions Tax (CAT), is paid by those receiving gifts or inheritances such as money or land.
  • Local Property Tax, is paid by owners of residential property.

Progressive taxes, take income level into account. This means that the tax rate increases as income increases

Indirect tax, is a tax on consumption and spending by consumers and is not paid directly to Revenue. It is paid to the seller, who then sends it to Revenue.

  • VAT (Value added tax), is added to the price of most goods and services.
  • Customs Duties, are taxes levied on imports coming into the country from outside the EU.
  • Excise Duties, are taxes on goods such as alcohol and cigarettes to help reduce consumption of these goods.
  • Motor Tax, is a tax that must be paid annually on all roadworthy vehicles.
  • Vehicle Registration Tax (VRT), is a tax levied on those who purchased and registered a new car or motorcycle in the state.

Regressive taxes, are levied at the same rate regardless of income.

  • The Revenue Commissioners, is the state agency responsible for collecting taxes on behalf of the government.
  • Tax avoidance, is when taxpayers take advantage of the tax system to legally reduce the amount of tax they owe.
  • Tax evasion, is when taxpayers illegally avoid paying the full amount of tax they owe.