ACC3140 – TAXATION
UNIT 11 – THE UK ECONOMY, ETHICS, TAX AVOIDANCE AND TAX EVASION
GOVERNMENT SPENDING AND RECEIPTS
TOTAL £1,053BN
TOTAL £820BN
, 2022-23 (FORECAST AT NOV 2022)
WHAT IS THE PURPOSE OF TAXATION?
The purpose of taxation is to raise revenue for the provision by the government of public service
benefits
Generally, taxation is used as a tool for supporting and paying for the basic functions of
government
Additionally, taxation may be used to promote behaviours believed to be for the good of the
wider community, e.g. environmental taxes
ADAM SMITH’S FOUR CANNONS OF TAXATION (1776)
Equity (i.e. fairness)
Certainty
Convenience (with respect to the timing and manner of payment)
Efficiency
small cost of collection as a proportion of revenue raised
no distortion of behaviour
A FAIR TAX
Treat equal people in equal circumstances in an equal way
Horizontal equity
But who is equal to whom?
Equality of income, wealth, expenditure?
UNIT 11 – THE UK ECONOMY, ETHICS, TAX AVOIDANCE AND TAX EVASION
GOVERNMENT SPENDING AND RECEIPTS
TOTAL £1,053BN
TOTAL £820BN
, 2022-23 (FORECAST AT NOV 2022)
WHAT IS THE PURPOSE OF TAXATION?
The purpose of taxation is to raise revenue for the provision by the government of public service
benefits
Generally, taxation is used as a tool for supporting and paying for the basic functions of
government
Additionally, taxation may be used to promote behaviours believed to be for the good of the
wider community, e.g. environmental taxes
ADAM SMITH’S FOUR CANNONS OF TAXATION (1776)
Equity (i.e. fairness)
Certainty
Convenience (with respect to the timing and manner of payment)
Efficiency
small cost of collection as a proportion of revenue raised
no distortion of behaviour
A FAIR TAX
Treat equal people in equal circumstances in an equal way
Horizontal equity
But who is equal to whom?
Equality of income, wealth, expenditure?
