Summary EKN 120 - Chapter 17 - 21

South African Taxes

Antwoord: Personal Income Tax Corporate Income Tax Sales and Excise Tax

Apportioning the tax burden - BENEFITS RECEIVED PRINCIPLE

Antwoord: Households and businesses should purchase goods of the gov in same way they buy other commodities. Those who benefit most from gov goods = should pay the necessary taxes to finance them.

Apportioning the tax burden - ABILITY TO PAY PRINCIPLE

Antwoord: Tax burden should be apportioned according to tax payers income/wealth. Large incomes = pay more taxes than those with a lower income

Apportioning the tax burden (3)

Antwoord: 1.Ability to pay principle 2. Benefits received principle 3. Tax progressivity

Apportioning the tax burden - TAX PROGRESSIVITY (3)

Antwoord: 1. PROGRESSIVE - ave rate increases as income increases 2. REGRESSIVE - ave rate declines as income increases 3. PROPORTIONAL - ave rate stays the same regardless of income size PRP PRP PRP PRP

Application of APPORTIONING THE TAX BURDEN (4)

Antwoord: Personal income tax Value-added TAX Company income taxes Property tax 2PVC 2PVC 2PVC 2PVC

Taxes that are levied in SA?

Antwoord: Capital gains VAT customs duty environmental tax fuel levy provisional tax

Public Choice Theory

Antwoord: The economic analysis of government decision making, politics and elections. Demonstrates that majority voting can produce inefficiencies and inconsistencies.

Inefficiency voting outcomes

Antwoord: Majority voting can produce inefficient decisions. (a) Majority voting leads to rejection of a public good that would entail a greater total benefit than total cost. (b) Majority voting results in acceptance of a public good that has a higher total cost than total benefit.

Interest groups

Antwoord: Those who have a strong preference for a public good may band together into interest groups and use advertisements, mailings and direct persuasion to convince others of the merits of that public good.