THE ROLE OF THE ROLE OF GOVERNMENT AND GOVERNMENT AND

TAXATIONTAXATION

UNIT 22UNIT 22

HOW DO THESE PEOPLE RELATE HOW DO THESE PEOPLE RELATE TO DIFFERENT TYPES OF TO DIFFERENT TYPES OF ECONOMIC SYSTEMS?ECONOMIC SYSTEMS?

WHAT’S THE DIFFERENCE WHAT’S THE DIFFERENCE BETWEEN BETWEEN LEFT/RIGHTLEFT/RIGHT? MATCH ? MATCH

THE SYMBOLS.THE SYMBOLS.

WHO WOULD MAKE SUCH WHO WOULD MAKE SUCH STATEMENTS? STATEMENTS? LEFTLEFT OR OR RIGHTRIGHT??

I’m a war veteran.I’m a war veteran. I am pro-life.I am pro-life. I believe in a small I believe in a small

government.government. Money is the main indicator Money is the main indicator

of someone’s success.of someone’s success. I am open-minded.I am open-minded. I believe in God.I believe in God. I don’t believe the politicians.I don’t believe the politicians. I am against homosexual I am against homosexual

marriages.marriages. I listen to music with socially I listen to music with socially

engaged lyrics. engaged lyrics.

Government should not waste Government should not waste too many resources on art and too many resources on art and education.education.

Those who are unable to Those who are unable to provide for themselves should provide for themselves should not rely on government’s help.not rely on government’s help.

I am conservative.I am conservative. I believe marijuana should be I believe marijuana should be

legalised.legalised. It’s not fair that in times of It’s not fair that in times of

crisis some people are getting crisis some people are getting richer and the others are richer and the others are getting poorer.getting poorer.

ARE YOU ARE YOU LEFTLEFT OR OR RIGHTRIGHT?? If you’re interested in finding out, do the If you’re interested in finding out, do the

following questionnaire.following questionnaire.

http://www.politicalcompass.org/test

THE ROLE OF GOVERNMENTTHE ROLE OF GOVERNMENT central political and economic issue in central political and economic issue in industrialized democracies in the past three industrialized democracies in the past three decadesdecades

LEFT-WING VIEWSLEFT-WING VIEWSThe government has an essential role in:The government has an essential role in: providing the economic infrastructure (publicproviding the economic infrastructure (public

transport, telecommunications, and so on)transport, telecommunications, and so on) providing services such as education, health care, providing services such as education, health care,

social security and perhaps housingsocial security and perhaps housing regulating working conditions, health and safety regulating working conditions, health and safety

standards, and so onstandards, and so on

THE ROLE OF GOVERNMENTTHE ROLE OF GOVERNMENTRIGHT-WING VIEWSRIGHT-WING VIEWS most of these activities can be left to most of these activities can be left to private enterprise and the market private enterprise and the market systemsystem too much regulation is bad for too much regulation is bad for business and leads to inefficiencybusiness and leads to inefficiency tthe role of government should be restricted to he role of government should be restricted to

activities such as: activities such as: defencedefence the policethe police the justice systethe justice systemmIs there too much or too little government in your Is there too much or too little government in your country, unnecessary laws, or not enough laws?country, unnecessary laws, or not enough laws?

HOW DOES THIS CARTOON HOW DOES THIS CARTOON COMMENT ON THE ROLE OF COMMENT ON THE ROLE OF

GOVERNMENT IN A COUNTRY’S GOVERNMENT IN A COUNTRY’S ECONOMY?ECONOMY?

FOOD FOR THOUGHT…FOOD FOR THOUGHT… Some people argue that governments have too much power,

that they interfere with market forces, and that too much regulation is bad for business.

Do you think that any of the following tasks should not be Do you think that any of the following tasks should not be undertaken or regulated by the government, but should be undertaken or regulated by the government, but should be left to the private sector and the market system?left to the private sector and the market system?

EducationEducation Health careHealth care HousingHousing Working conditions (working hours, child labour, minimum Working conditions (working hours, child labour, minimum

wages, etc.)wages, etc.)

Social security Social security (unemployment and (unemployment and sickness benefits, old age sickness benefits, old age pensions)pensions)

Defence (the armed Defence (the armed services – army, navy, air services – army, navy, air force)force)

The police, the justice The police, the justice system, prisons, and so on)system, prisons, and so on)

Public transport (trains, Public transport (trains, buses, and so on)buses, and so on)

Traffic regulations (the Traffic regulations (the driving test, speed limits, driving test, speed limits, seat belts, the alcohol limit, seat belts, the alcohol limit, parking restrictions, the size parking restrictions, the size and weight of lorries and and weight of lorries and trucks, the safety of cars, trucks, the safety of cars, etc.)etc.)

Health, safety and Health, safety and cleanliness regulations cleanliness regulations (shops, factories, (shops, factories, restaurants, food, restaurants, food, medicines, the disposal of medicines, the disposal of chemical and nuclear chemical and nuclear waste, and so on)waste, and so on)

The sale of alcohol, drugs, The sale of alcohol, drugs, guns, and so onguns, and so on

The press, broadcasting, the The press, broadcasting, the arts, entertainment, and arts, entertainment, and the freedom of expression the freedom of expression (sex, violence, blasphemy, (sex, violence, blasphemy, politics, and so on)politics, and so on)

READING – READING – THE GOOD LIFE THE GOOD LIFE BECKONSBECKONS, RB, p 36, RB, p 36

I Read the extract from a talk by J.K. Galbraith and answer the question: What areas does Galbraith describe as responsibilities of the state?

II Read the text again and answer these questions:1 What does Galbraith say about people who criticise government services?2 Why, according to Galbraith, is the market system not sufficient to guarantee scientific research?3 According to what you have read, how would you characterize Galbraith’s politics?

READING – READING – THE GOOD LIFE THE GOOD LIFE BECKONSBECKONS, RB, p 36, RB, p 36

III Read the definition of the welfare state: “A political system based on the premise that the government has the responsibility for the well being of its citizens, by ensuring a minimum standard of living for everyone.”

What is the term that Galbraith uses for the same concept?

READING – READING – FREE TO CHOOSEFREE TO CHOOSE – – MMK, p 110 K, p 110

I Read the extract from MK, p 110 and answer the following questions: What do Milton and Rose Friedman think should be What do Milton and Rose Friedman think should be

the responsibilities of the state?the responsibilities of the state?

Which areas should, according to them, be free from Which areas should, according to them, be free from the government intervention?the government intervention?

According to what you have read, how would you According to what you have read, how would you characterize the Friedmans’ views?characterize the Friedmans’ views?

READING SUMMARYREADING SUMMARY – – M MK & RBK & RB J.K. GALBRAITH believes that it is the role of state to... because the market system… MILTON AND ROSE FRIEDMAN, on the contrary… They regret that we are not free to… JOHN MAYNARD KEYNES (1883 – 1946) A British economist whose ideas on financial matters influenced

much of the thought on economics during the 20th century. In recession the economy can be made to grow and

unemployment reduced by: increasing government spending, even if this causes a budget

deficit making reductions in interest rates (cost of borrowing) Is Keynes closer to the Friedmans or J. K. Galbraith in his beliefs?

HOW DOES DAVID CAMERON SEE HOW DOES DAVID CAMERON SEE THE ROLE OF GOVERNMENT?THE ROLE OF GOVERNMENT?

1 1 Watch the video and take notes. Watch the video and take notes. 2 Which presentation skills have 2 Which presentation skills have you noticed?you noticed?

http://www.ted.com/talks/lang/eng/david_cameron.html

TAXATIONTAXATION‘‘In this world nothing can be said to beIn this world nothing can be said to be certaincertain exceptexcept death and taxes!’death and taxes!’

BENJAMIN FRANKLIN BENJAMIN FRANKLIN (1706-1790) one of the Founding Fathers of the(1706-1790) one of the Founding Fathers of theUnited States of America, political theorist, politician, scientist, inventor, United States of America, political theorist, politician, scientist, inventor, statesman, and diplomatstatesman, and diplomat

TAXATIONTAXATIONDO NOT FORGET THAT…DO NOT FORGET THAT… The last sum of money you received had probably already been The last sum of money you received had probably already been

taxed, or will be liable to taxation, depending on which country you taxed, or will be liable to taxation, depending on which country you are in. Similarly, the last sum of money you spent probably included are in. Similarly, the last sum of money you spent probably included a percentage of tax. a percentage of tax.

MAKE A LIST OF ALL THE DIFFERENT TAXES YOU CAN THINKMAKE A LIST OF ALL THE DIFFERENT TAXES YOU CAN THINK OF. OF. If you do not know their actual names, try to describe the different If you do not know their actual names, try to describe the different

taxes, e.g. ‘Tax you pay if you import something from another taxes, e.g. ‘Tax you pay if you import something from another continent.’, and so on. continent.’, and so on.

The following pictures might help you:The following pictures might help you:

TYPES OF TAXES – MK, p 112TYPES OF TAXES – MK, p 112VOCABULARY Which different taxes can you name? The same amount of money can be taxed more than once. Can

you give any examples of this? Do the vocabulary task and compare your answers.

DISCUSSION1 Which of the taxes above do you have in your own country?2 Is there a flate rate of income tax (the same for everybody) or is it progressive? Whiych system do you prefer?3 Do you prefer direct or indirect taxes?

WORD PARTNERHIPS – TAXWORD PARTNERHIPS – TAXADD TAX AND/OR TAXATION BEFORE OR AFTER THE FOLLOWING WORDS: …………....AUTHORITIES……… AUTHORITIES……… ……LOOPHOLE……...……LOOPHOLE……............... ....…....…....AVOIDANCE………AVOIDANCE……….... ……LOSS…………………LOSS……………................ …………....CONSULTANT……… CONSULTANT……… ……PAYER…………………PAYER……………............ …………....CORPORATION……CORPORATION…….. ……PROGRESSIVE…………PROGRESSIVE……...... …………....DEDUCTIDEDUCTIBBLE……LE…….......... ……REGRESSIVE……………REGRESSIVE……….... …………....DIRECT…………DIRECT………….............. ……RETURN………….……RETURN…………............. ..…..…......EVASION………EVASION……….................. ……SALES………………SALES………….................... .….…........FREE……………FREE……………................ ……SHELTER……………SHELTER……….................. …………..HAVEN…………HAVEN………….................. ……YEAR………………YEAR…………........................ .……INCOME……….……INCOME………...................... ……RELIEF……………RELIEF……….......................... …………..INDIRECT………INDIRECT………................ ……BREAK………………BREAK………….................... …………..INSPECTOR…………INSPECTOR…………..

USE THE CORRECT FORM OF THESE VERBS USE THE CORRECT FORM OF THESE VERBS IN THE FOLLOWING SENTENCES:IN THE FOLLOWING SENTENCES:

avoid be liable deduct evade levy lower pay raise If you inherit a lot of money, you……………………….....for capital

transfer tax. In some countries, employers have to………………………......tax

from your pay and …………………………...... directly to the tax authorities, so employees have no possibility of ……………………………. income tax.

Some people hire expensive accountants to tell them how to ……………………………. taxes – legally, of course!

The government always tries to …………………………. taxes in the year before elections.

The government has a huge deficit and is going to have to ……………………………. either the arte of VAT or income tax.

The government …………………………… special taxes on petrol, alcohol and tobacco.

TAXATION BASICS - HANDOUTTAXATION BASICS - HANDOUTTHE FUNCTIONSOF TAXATION

to___________ revenue to finance government ___________

indirect excise duties – to discourage people from ___________ and ___________ to encourage capital

___________ to reduce their tax bills

THE ADVANTAGES AND DISADVANTAGES OF DIFFERENT TAX SYSTEMS PROGRESSIVETAXATION – people who___________ more spend larger proportion of their ___________ on income tax REGRESSIVETAXATION - people who earn less, spend larger___________of their income on consumption through ____________ tax

WHAT DOES THIS CARTOON TELL US WHAT DOES THIS CARTOON TELL US ABOUT THE FUNCTIONS OF ABOUT THE FUNCTIONS OF

TAXATION?TAXATION?

TAXATION BASICS - HANDOUTTAXATION BASICS - HANDOUTTAX EVASION - making ___________ declarations to the tax ___________, trying___________ not to pay tax BLACK OR UNDERGROUND ECONOMY - accounts for

more than ___________ of national income in some countries (especially small and medium-sized family ___________)

MOONLIGHTING - undeclared, ___________ evening jobs

TAXATION BASICS - HANDOUTTAXATION BASICS - HANDOUTTAX AVOIDANCE - _____________ the amount of tax you pay to a legal minimum

SORT OUT THE WORDS FROM THE BOX ON THE RIGHT. AVOIDING TAX ON SALARIES AVOIDING TAX ON PROFITS

LOOPHOLES IN TAX LAWS TAX LOSSPERKS OR BENEFITS MONEY LAUNDERING TAX SHELTERSTAX-DEDUCTIBLESTAX HAVENS

TAXATION BASICS – T/F?TAXATION BASICS – T/F? Taxes can be designed both to encourage and discourage Taxes can be designed both to encourage and discourage

spending.spending. The same amount of money can be taxed more than once.The same amount of money can be taxed more than once. Progressive taxes can discourage people from working extra Progressive taxes can discourage people from working extra

hours.hours. Sales taxes are unfair because poor people spend more than the Sales taxes are unfair because poor people spend more than the

rich.rich. More than 50% of national income in Italy escapes taxation.More than 50% of national income in Italy escapes taxation. Loopholes are a common form of tax evasion.Loopholes are a common form of tax evasion. If you pay a lot of your income into a pension fund or a life If you pay a lot of your income into a pension fund or a life

insurance policy you never have to pay tax on it.insurance policy you never have to pay tax on it. If a company invests in new machinery or equipment, this If a company invests in new machinery or equipment, this

reduces the amount of taxes it has to pay at the end of the tax reduces the amount of taxes it has to pay at the end of the tax year. year.

TAXATION TAXATION BASICS - RECAPPINGBASICS - RECAPPINGEXPLAIN THESE TERMS:A raise revenue for government

expenditure indirect excise duties capital expenditureB taxing business profits progressive income tax regressive sales taxC black or underground

economy moonlighting

EXPLAIN THESE TERMS:D perks loopholes in tax laws tax shelters tax-deductible

E a tax loss a tax haven money laundering

TAXATION AND GOVERNMENT TAXATION AND GOVERNMENT SPENDING – MK, p 113SPENDING – MK, p 113

I READING – Read the statements. Which of them are in favour oftaxation and government spending, and which against? Which of the statements do you find the most convincing, and why?

In favour

Against

II PARAGRAPH WRITINGWrite a short paragraph summarising the most relevant arguments for and against taxation and government spending, preferably with a conclusion coming down on one side or the other.