Lesson 26 May

Taxing

The word “tax” comes from the Latin word taxo meaning “I estimate”. To tax is to impose a
financial charge or other levy upon a taxpayer.- an individual or a legal entity- by a state or the
functional equivalent for a state and failure to pay it is punishable by law. Taxes are also
imposed by many administrative decisions. Taxes consist of direct and indirect tax and may be
paid in money or as its labour equivalent (often but not always unpaid labour). A tax may be
defined as a “pecuniary burden” laid upon individuals or property owners to support the
government, a payment exated by legislative authority. A tax ‘is not a voluntary payment or
donation, but an enforced contribution” and is “any contribution imposed by government
whether under the name of toll, tribute, impost, duty, custom excise, subsidy, aid, supply, or
other name.

The legal definition and the economic definition of taxes may differ since some, transfers to the
public sector are comparable to prices. Examples include tuition at public universities and fees
for utilities provided by local governments. Governments also obtain resources by creating
money (e.g. Printing bills and minting coins) through voluntary gifts9 e.g. (Contributions to
public universities and museum), by imposing penalties (e.g. Traffic fines), by borrowing and by
confiscating wealth.

From the point of view of economists, a tax is a non –penal, yet compulsory transfer of
resources from the private to public sector levied on a basis of predetermined criteria and without
reference to specific benefit received.

In modern taxation systems, taxes are levied in money. Taxation is characteristic of traditional or
pre-capitalist state and their functional equivalents. The method of taxation and the government
expenditure of taxes raised are often highly debated in politics and economics. Tax collection is
performed by a government agency. When taxes are not fully paid, civil penalties such as fines
or forfeiture or even criminal penalties such as incarceration may be imposed on the non-paying
entity our individual.

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Comprehension

Answer the questions about the text

1. How does the author define tax?- The author defines tax as a “pecuniary burden” laid
upon individuals or property owners to support the government, a payment exated by
legislative authority
2. What does it mean to tax someone? - To tax someone is to impose a financial charge by a
state or the functional equivalent for a state.
3. What could be named as the two types of taxes?-The two types of taxes are: direct and
indirect tax.
4. What is the name given to a person who pays taxes?-The person who pays tax is named
taxpayer.
5. What is the difference between the legal and the economic definitions of tax? - The
difference between the legal and the economic definitions of tax is that transfers to the
public sector are comparable to prices.
6. What penalties are imposed to those who do not pay taxes? - The penalties imposed to
those who don’t pay taxes are: fines or forfeiture or even criminal penalties such as
incarceration.

Grammar

Modal verbs should

We often use should to talk about obligation. It is less strong than must.

E.g. People should drive more carefully

In questions should is used to ask for advice or instructions

E.g. What should we do?

We can use should to say that something is probable (because it is logical)

E.g. Paul should be here soon, he left home at six

We use should and shouldn’t to give advice or to talk about what we think is right or wrong. E.g.
you look tired. I think you should take a few days off.

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Read the sentences and say which meaning should has in each one of them: advice, obligation or
probability.

1- Alice works much. She should talk to her boss- probability

2- I don’t think you should go out- advice
3- You Shouldn’t get angry-advice
4- It shouldn’t take long to drive there- probability

5-He shouldn’t smoke. And he should stop drinking, too-advice

6-You should be wearing your seatbelt- obligation

7-Are you ready? The train should be here soon.- probability

Text: Direct and indirect taxes

In the general, a direct tax is one paid directly to the government by the persons (jurists or
natural) on whom it is imposed (filed). Examples include some income taxes, corporate taxes
and transfer taxes such as estate (inheritance) tax and gift tax. In this sense, a direct tax is
different from an indirect tax or “collected” tax such as value Added tax (IVA). A
“collected” tax is one which is collected by intermediate who turn over the proceeds to the
government and file the related tax return. Some commentators have argued that “a direct tax
is one that cannot be shifted by the taxpayer to someone else, whereas an indirect tax can be.
In the United States, the term “direct tax” has different meaning for the purposes of
constitutional law. Traditionally, a direct tax in the constitutional sense means a tax on
property by reason of its ownership.

An indirect tax such as value Added Tax (VAT), sales tax and goods on Services. Tax is a
tax collected by an intermediary such as Value Added Tax( VAT), sales tax and goods on
Services Tax is a tax collected by an intermediary such as a retail store from the person who
bears the ultimate economic burden of the tax(such as the customer). The intermediary later
files a tax return and forwards the tax proceeds to government with the return. An indirect tax
may increase the price of a good so that consumers are actually paying the tax by paying

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 more for the products. Examples would be fuel, liquor, and cigarette. An excise duty on
motor car is paid in the first instance by the manufacturer of the cars; ultimately the
manufacturer transfers the burden of this duty to the buyer of the car in form of a higher
price.

Comprehension

1- What is the difference between direct tax and indirect tax? –The difference between
direct tax and indirect tax is that a direct tax is one paid directly to the government by the
persons on whom it is imposed to, and indirect tax is one which is collected by
intermediate who turn over the proceeds to the government.
2- Mention some examples for each of the taxes mentioned in the tax. –The examples of
direct tax are: income taxes, corporate taxes and transfer taxes such as estate (inheritance)
tax and gift tax, and the examples of indirect tax are: Added Tax (VAT), sales tax and
goods on Services.
3- To whom does the money paid in direct tax belongs to? –The money paid in direct tax
belongs to the government.
4- What are the effects of indirect taxes on the prices of commodities? –The effects of
indirect taxes on the prices of commodities are that an indirect tax may increase the price
of a good so that consumers are actually paying the tax by paying more for the products.
5- Who pays direct taxes in the United States of America? –The property owners pay direct
taxes in the United States of America.
6- Is VAT an indirect tax why? –Yes, because it is collected by intermediate who turn over
the proceeds to the government.

Grammar

Modal verbs Must and Can’t

Modal verbs must and can’t are used to express obligation and prohibition.

E.g. you must pay attention in classes. You can’t be distracted.

Complete the sentences with must or can’t

1. The library is a place to study. You--------can’t-------speak loud here

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 2. Stop talking with your college. You -----------must----------pay attention to your teacher
3. My son has got the flu. He --------------can’t---------------go to the University
4. While driving you-----can’t------ use the mobile phone
5. Your test is tomorrow. You---must----study.
6. You---can’t---miss classes today. You have already been absent the past three days.
7. You -----must-----behave yourself. You are not child anymore.

Writing

Write a composition about the differences between direct and indirect taxes mentioning their
importance to the development of a country.

-----The differences between direct and indirect taxes are that direct tax is one paid directly to the
government by the persons on whom it is imposed to. And the examples of direct tax are: income
taxes, corporate taxes and transfer taxes such as estate (inheritance) tax and gift tax. And indirect
tax is one which is collected by intermediate who turn over the proceeds to the government. And
the examples of indirect tax are: Value Added Tax (VAT), sales tax and goods on Services. Both
direct and indirect taxes are important for the development of a certain countries, because the
money collected is used for public services such as education, health, security of the people in a
certain country.

Text: The purpose and effects of taxes

Money provided by taxation has been used by states throughout history to carry out many
functions. Some of these include expenditures on war, the enforcement of law and public order’s
protection of property, economic infrastructures and operation of government itself.
Governments also use taxes to fund welfare and public services. These services can include:
education system, health care system, pension for the elderly and public transportation. Colonial
and modernizing states have also used cash taxes to draw or force reluctant subsistence
producers into cash economies.

Government use different kinds of taxes and vary the tax rates. This is done to distribute the tax
burden activities, such as business or to redistribute resources between individuals or classes in
the population. Historically, the nobility depended economically on taxes applied to the poor.
Modern social security systems are intended to support the poor, the disabled and the ones who

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are retired by imposing taxes on those who are working. In addition, taxes are applied to fund
foreign aid and military ventures and also to influence the macroeconomic performance of the
economy. The government’s strategy for doing this is called its fiscal policy, or to modify
patterns of consumption or employment within an economy, by making some classes of
transaction more or less attractive.

Comprehension

1-The government uses tax money to invest on whatever it considers valid-------------------

T-------------------------------------------------------------------------------------------------------------------
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2-Taxes may be used build schools-----

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3- Public services like schools and hospitals depend on the taxes for their operations---
T-------------------------------------------------------------------------------------------------------------------
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4-Government use a single type of tax and do not vary tax rates---------
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5-In the past nobles depend on taxes paid by the poor----------------------

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6 -Mozambican government does not collect taxes on the poor--------------

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Present perfect continuous

We use the present perfect continuous to show that something started in the past and has
continued up until now. “For five minutes” for two weeks and since Tuesday are all time
expressions which can be used within the present continuous Form; has / have+been+gerund

E.g. they have been talking for the last hour

Put the verbs into the correct form (present perfect continuous).

1- He-----has been working since 1985-----(work in this company since 1985)

2-I----have been waiting for you-----(wait) for you since two o’clock

3- Mary ----has been living ----(live) in Germany since 1992

4-Why is he so tired? He ------has been playing -----(paly) tennis for hours

5 -How long---------have you been learning-------- (learn/you) English?

6 -We -------have been looking for------(look for) the motorway for more than an hour

7- I------have been living-----(live) without electricity for two weeks

8-The film-------hasn’t been running------ (run/not) for ten minutes yet, but there’s a commercial
break already

9- How long-----has she been working----- (work/she) in the garden?

10 She -----hasn’t been being------(not /be) in the garden for more than an hour