4.4.1 Government Revenue

• Taxes are the primary and most significant source of revenue
• Taxes are compulsory payments made to the government by individuals and businesses.


  True
• What are direct taxes?

  Taxes paid directly to the government
• Corporate tax is a tax paid by businesses on their profits.


  True
• Match the direct tax with its payer:

  Income Tax ↔️ Individuals

  Corporate Tax ↔️ Businesses

  National Insurance ↔️ Employees and Employers
• What are indirect taxes?

  Taxes paid through higher prices
• Excise duties are levied on specific goods like alcohol and tobacco.

  True
• Match the type of tax with its characteristic:

  Direct Tax ↔️ Paid directly to the government

  Indirect Tax ↔️ Added to the price of goods
• Excise duties are specifically levied on the production or sale of certain goods and services such as alcohol, tobacco, and fuel
• What is an example of a direct tax paid directly by individuals or businesses to the government?

  Income Tax
• Direct taxes are generally regressive.

  False
• What is the primary and most significant source of government revenue?

  Taxes
• Direct taxes are a key revenue source for governments to fund essential services.


  True
• Match the type of indirect tax with its description:

  Value Added Tax ↔️ Charged on added value at each stage

  Excise Duties ↔️ Levied on specific goods like alcohol
• Indirect taxes, such as VAT and excise duties, are collected by retailers on behalf of the government
• Non-tax revenue is often voluntary, unlike compulsory taxes.

  True
• What is government revenue?

  Income received by the government
• How does the government raise money through borrowing?

  By issuing bonds
• Match the type of government revenue with its description:

  Taxes ↔️ Compulsory payments to the government

  Borrowing ↔️ Raising money through bonds

  Other Sources ↔️ Revenue from state-owned enterprises
• Income tax is a tax paid on personal income
• What does National Insurance fund?

  State benefits
• VAT is a tax charged on the value added at each stage of production
• How is VAT included in the final price paid by consumers?

  It is added to the price
• What is the main type of indirect tax charged on the value added at each stage of production and distribution?

  VAT
• Indirect taxes are paid by consumers when they purchase goods and services.

  True
• Direct taxes are paid directly to the government
• Advantages of indirect taxes

  1️⃣ Ease of collection

  2️⃣ Discouragement of certain consumption
• Borrowing allows the government to finance spending in excess of tax revenue.
• What is the purpose of income tax paid by individuals?

  Fund public services
• Indirect taxes may disproportionately affect low-income households because they are regressive.


  True
• What is an example of non-tax revenue generated from fines imposed for violating laws?

  Speeding tickets