6.1. Answer the questions.

1. What are the three main types of investments? 2. What is the safest investment?

3. What are the advantages of bonds?

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4. What are the advantages and disadvantages of stocks? 5. How can you reduce the risk of your investing in

stocks?

6. What investment advice could be given to a person in the middle of the career and near the retirement?

Give the English equivalents for the following: банковские счета;

долгосрочные займы; норма прибыли; наличные деньги;

вложения под постоянный процент; потерпеть убытки;

обанкротиться; снизить риск; денежные средства;

непредвиденные обстоятельства; выход на пенсию;

перевести деньги в облигации.

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UNIT XI. TAXATION

1. WHAT ARE TAXES?

Text 1

Read the text and memorize the definitions and vocabu-lary in bold type.

Part 1

Taxation is the Government’s main source of revenue. A tax is a compulsory charge levied on the taxpayer by the state. There are two main types of taxation in the UK, namely direct and indirect. Income tax, corporation tax, capital transfer tax, motor vehicle tax and local rates are all direct taxes, since they are paid by the taxpayer direct to the respective Government de-partment. Indirect taxes are those paid on the purchase or impor-tation of certain goods and services. They include value added tax (VAT), customs duties and excise duties. They are indirect because they are paid initially by the manufacturer, importer or wholesaler and then passed on to the final customer.

Taxes are considered to have several functions:

a) fiscal or budgetary, to cover government expenditure, to provide the public authorities with the revenue required for meeting the cost of defense, social services, interest payments on the national debt, municipal services, etc. This is the main function of taxation;

b) economic, to give effect to economic policy, to promote stable economic growth of the nation. Thus, this subsidiary func-tion of taxation is to control the level of economic activity. Selec-tive employment tax fell into this category, since it encouraged economy in the use of labor in the service and construction indus-tries. The repayment of the tax, together with additional sums to manufacturing industries in the development areas, was an added incentive to firms to move to those areas and therefore stimulated economic activity in them. Similarly, a substantial increase in corporation tax could cause firms to limit their plans for devel-opment and expansion, while a reduction in the rate charged would encourage firms to adopt an expansionist policy.

The other aspect of this subsidiary function is also to influ-ence production and consumption. The imposition of a tax when goods are bought, or excise duty on certain goods, can reduce the

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total consumption of them. The imposition of tariffs on imported goods will discourage people from buying them and stimulate the sales of home-produced goods;

c) social, to increase the economic welfare of the commu-nity and to reduce the inequality of incomes. This has been achieved — and is still being maintained — by income tax and capital transfer tax. These taxes are progressive. The amount people pay is in accordance with what they can afford, so that a person with a high income pays more income tax than one who earns less and, in addition, account is taken of their financial re-sponsibilities. Consequently, if two men receive the same amount in wages but one is single and the other is married and has two children, the single person will pay more income tax. This system is operated by giving allowances and relieves against income. Income tax and capital transfer tax have, therefore, been the main causes of the more even distribution of Britain’s wealth, par-ticularly since the end of the Second World War.

Part II

The effects of taxation are obviously taken into account as far as possible when planning company policy. Companies are subject to cor-poration tax on their profits and anycapital gains obtained bythe dispos-alofassets.Therateofthistaxissubjecttochangeineach budget.

Besides being subject to taxation themselves, businesses are also responsible for deducting income tax from the wages and sala-ries of their employees and transmitting it to the Inland Revenue. Wages departments also deduct National Insurance contributions from employees’ pay. This is, in effect, another tax, since it repre-sents a compulsory cost to the firm.

The government’s financial policy — and hence taxation — is reviewed annually in the budget. Tax changes can be made at other times if they become necessary but changes outside the budget are exceptional. In preparing the budget the Chancellor of the Exchequer must consider the total obligation for government expenditure on education, defense, social services, housing, etc. and decide how this is to be raised. It must be decided how much of this can be raised from taxation; the remainder is financed by borrowing. It is here that the effects of the various forms of taxation must be considered and the right ones chosen for the state of the economy.

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A constant watch is kept on levels of employment in all parts of the country, trends of production, prices and the balance of payments throughout the year, by the Chancellor’s economic advisors. On the basis of this information the budget is prepared. Work continues constantly on possible taxation changes and their effect and implemen-tation. Major tax reforms require years of work before they can be introduced. However, an effective budget must be designed to suit the current economic circumstances of the country. Specific work on it, therefore, begins a few months before Budget Day which is usually at the beginningof the financial year, earlyin April.

A number of countries have problems because of significant taxpayer non-compliance. Along with cases of illegal evasion of tax obligations there are entirely legal ways of avoidance by which a person may so arrange his affairs as to minimize, or even elimi-nate tax liability on his property and income.

Find in the text the English equivalents for: прямой / косвенный налог;

позволить себе;

налог на транспортное средство; распределение благ; подоходный налог;

подготовить бюджет;

налог на добавленную стоимость; вычитать из зарплаты; таможенная пошлина;

незаконное уклонение от уплаты налога; акциз;

налоговое обязательство;

покрывать государственные расходы; государственное страхование; источник дохода;

обложение пошлинами импортных товаров.