Apr 19, 2016

Finance English practice: Unit 49 — Taxation

25 cards
, 73 answers
  • Complete the sentences below. Use the key words if necessary.
    • Direct taxes

      key words
      taxation      ○      Direct taxes      ○      income tax      ○      capital gains tax      ○      imposed      ○      capital transfer tax      ○      inheritance tax      ○      estate tax      ○      corporation tax      ○      social security


      Governments finance most of their expenditure by . If they spend more than they levy or charge in taxes, they have to borrow money.

      are collected by the government from the income of individuals and businesses.
      • Individuals pay on their wages or salaries, and most other money they receive.
      • Most countries have a on profits made from the sale of assets such as stocks or shares. This is usually or levied at a much lower rate than income tax.
      • A (commonly called death duty in Britain) is usually imposed on inherited money or property. Other names for this tax are or .
      • Companies pay on their profits. Business profits are generally taxed twice, because after the company pays tax on its profits, the shareholders pay income tax on any dividends received from these profits.
      • Companies and their employees also have to pay taxes (called national insurance in Britain) which the government uses to finance spending — unemployment pay, sick pay, etc.

      Indirect taxes

      key words
      Indirect taxes      ○      value-added tax      ○      goods and services tax      ○      sales taxes      ○      excise taxes      ○      tariffs      ○      progressive      ○      proportional taxes      ○      regressive


      are levied on the production or sale of goods and services. They are included in the price paid by the final purchaser.
      • In most European countries, companies pay VAT or , which is levied at each stage of production, based on the value added to the product at that stage. The whole amount is added to the final price paid by the consumer. In Canada, Australia, New Zealand and Singapore, this tax is called or GST.
      • In the USA, there are , collected by retailers, levied on the retail price of goods.
      • Governments also levy or excise duties — additional sales taxes on commodities like tobacco products, alcoholic drinks and petrol.
      • Special taxes, called , are often charged on goods imported from abroad.

      Income tax for individuals is usually : people with higher incomes pay a higher rate of tax (and therefore a higher percentage of their income) than people with lower incomes. Indirect taxes such as sales tax and VAT are called , imposed at a fixed rate. But indirect taxes are actually : people with a low income pay a proportionally greater part of their income than people with a high income.

      Non-payment of tax

      key words
      perks      ○      tax havens      ○      tax burden      ○      tax avoidance      ○      loopholes      ○      tax evasion


      To reduce the amount of income tax that employees have to pay, some employers give their staff advantages instead of taxable money, called , such as company cars and free health insurance.

      Multinational companies often register their head offices in — small countries where income taxes for foreign companies are low, such as Liechtenstein, Monaco, the Cayman Islands, and the Bahamas.

      Using legal methods to minimize your — the amount of tax you have to pay — is called . This often involves using — ways of getting around the law, because of an error or a technicality in the law itself. Using illegal methods — such as not declaring your income, or reporting it inaccurately — is called , and can lead to big penalties.

    • British English or American English?
      • corporation tax
        • British English
        • American English

      • income tax
        • American English
        • British English

      • petrol
        • American English
        • British English

      • gasoline
        • American English
        • British English

    • What are the standard names for the tax or taxes paid on the following?
      • 1. alcoholic drinks and tobacco products —  . . . 
        excise taxes
        • excise taxes
        • corporation tax

      • 2. company profits —  . . . 
        corporation tax
        • excise taxes
        • corporation tax

      • 3. goods bought in stores —  . . . 
        sales tax
        • excise taxes
        • sales tax

      • 4. money received from relatives after their death —  . . . 
        inheritance tax
        • inheritance tax
        • national insurance

      • 5. salaries and wages —  . . . 
        income and social security tax
        • excise taxes
        • income and social security tax

      • 6. goods made in other countries —  . . . 
        tariffs
        • capital gains tax
        • tariffs

      • 7. money made by selling stocks at a profit —  . . . 
        capital gains tax
        • capital gains tax
        • tariffs

    • Choose words with the following meanings.
      • 1. an adjective describing taxes on revenue or income —  . . . 
        direct
        • direct
        • indirect

      • 2. a tax that has one rate that is the same for everybody —  . . . 
        proportional tax
        • progressive tax
        • proportional tax

      • 3. money paid by the government to sick and unemployed people —  . . . 
        social security
        • tariffs
        • social security

      • 4. a tax that has a higher rate for tax payers with a higher income —  . . . 
        progressive tax
        • proportional tax
        • progressive tax

      • 5. an adjective describing taxes on consumption or spending —  . . . 
        indirect
        • indirect
        • direct

    • Are the following statements true or false?
      • 1. Capital gains are generally taxed at a higher rate than income. clue
        Most countries have a capital gains tax at a much lower rate than income tax.
        • false
        • true

      • 2. The same sum of money can be taxed more than once. clue
        Business profits are generally taxed twice, because after the company pays tax on its profits, the shareholders pay income tax on any dividends received from these profits.
        • false
        • true

      • 3. Sales taxes can be both proportional and progressive at the same time. clue
        Indirect taxes such as sales tax and VAT are called proportional taxes, imposed at a fixed rate. But indirect taxes are actually regressive.
        • false
        • true

      • 4. Excise duties are extra sales taxes on selected products. clue
        Excise duties are additional sales taxes on commodities like tobacco products, alcoholic drinks and petrol.
        • true
        • false

      • 5. Many international companies have their registered headquarters in small countries where they do only a small proportion of their business. clue
        Multinational companies often register their heads offices in tax havens – small countries where income taxes for foreign companies are low.
        • false
        • true

      • 6. Employees will generally pay less tax is their employer reduces their salary a little and provides them with a car. clue
        Some employers give their staff perks, such as company cars.
        • true
        • false

      • 7. Tax avoidance is illegal. clue
        Using legal methods to minimize your tax burden is called tax avoidance.
        • true
        • false

      • 8. Perks and loopholes are forms of tax evasion. clue
        Perks loopholes are ways of getting around the law called tax avoidance.
        • false
        • true

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