Vocabulary focus

Ex. 1. Find the words in the text which mean the following.

1. the amount of something that a factory, company, machine etc can produce or deal with

2. tax paid on the money that you earn

3. a person or organization that pays tax

4. taking a larger percentage of money from people with higher incomes than from people with lower incomes

5. an ability to change or be changed easily

Ex. 2. Fill the gaps in the sentences with suitable preposition from the text.

1. A central purpose of the tax system in any country is to distribute the cost of financing government activities as fairly as possible … the population.

2. A fair distribution of taxes is considered to be one that imposes taxes … people in accordance with their ability to pay.

3. The taxes paid by different individuals can be explicitly related to their society determined ability to contribute … the financing of government activity.

4. The ideal is to tax those with the same capacity to pay … the same rate.

5. So long as people feel that others are getting … … paying their "fair share" of taxes, their willingness to meet …their own tax obligations is greatly reduced.

COMPREHENSION

Ex. 1 Complete the following sentences using information from the text.

1. A central purpose of the tax system in any country is …

2. A fair distribution of taxes is considered to be …

3. The personal income tax is the only significant component of the tax system which has at least the potential of being …

4. Any tax reform concerned with improving the equity of the revenue system must pay particular attention to …

5. The essential role of the personal income tax in the tax system is to …

6. Increased reliance on the personal income tax is in theory an important means of …

7. The effect of the income tax on economic incentives is in part determined by …

Ex. 2. Answer the questions.

1. What is considered to be a fair tax system?

2. What is the peculiarity of the personal income tax?

3. Why is it desirable to increase the progressivity of the income tax?

4. What is the effect of the income tax on economic incentives?

5. Why is it necessary to strengthen the income tax administration?

Ex. 3. Discuss in pairs the advantages and disadvantages of progressive and regressive income taxes.

Ex. 4. Speak about the effect of the income tax on economic incentives.

T E X T 3

Value Added Tax

Read the text and do the tasks that follow.

Before discussing the value added tax it is desirable to define the term "value" and compare it with the term "price".

Though there is much in common between these two terms yet they are far from being the same.

To some extent, the following sentence explains the difference: "He is a man who knows the price of everything and the value of nothing." Value is a subjective measure of worth: what something is worth to its owner. That may be more than the price tag says it costs(as, say, in the case of jewelry received on special occasions), or it may be less (as is the case of the "free" airline ticket that demands the traveler stay in a particular expensive hotel on arrival).

MARKETING, for example, can be described as the art of making CONSUMERS feel that they have at least got "value for money"; that is, the product (and all its associations) is worth to them at least as much as they paid for it.

The value added tax is a simple-to-collect tax imposed on consumption. Popular in Europe, value added tax (VAT) is imposed at every stage of the production process. It is paid by the purchaser of goods and SERVICES and is levied as a percentage of the selling price. Manufactures pay VAT on their input and then charge it on their sales. They hand over to the government the tax that they have collected, net of the tax that they have paid. So the IRS ends up, in effect, collecting the tax on the VALUE added at each stage of the manufacturing process. Yet the burden of paying the tax actually falls on the CONSUMER.

Different rates of VAT apply to different goods and services. Some things, like books and children's clothes, may be "zero-rated" (that is there is no VAT on them at all). Within the EUROPEAN COMMUNITY strenuous efforts are being made to harmonize rates of VAT, and what is or is not zero-rated.

Quality is not an absolute value. It is always based upon and measured according to the expectations of the user.

Ex. 1. Answer the questions.

1. What is the difference between "value" and "price".

2. What is a value added tax?

3. Why does the burden of paying the tax actually falls on the consumer?