Types of Tax in UK
Progressive Tax:
This is a tax that when income rises people pay a higher % of their income in tax e.g. top rate of income tax is 40%. This is paid on earnings over approx £30,000 a year.
Regressive Tax.
This occurs when an increase in income leads to a smaller % of their income going on the tax. E.G excise duties. A regressive tax means those on low incomes pay a higher % of tax.
Proportional Tax.
This occurs when an increase in income leads to the same % increase in Tax
- Horizontal Equity: The equal treatment of people in the same situation
- Vertical Equity : The redistribution from the better off to the worse off in the case of taxes this means the rich paying proportionately more taxes than the poor
The Requirements of A Good Tax system
- Horizontal Equity. I.e. those in the same circumstances should pay the same taxes
- Vertical Equity. A degree of proportionality is important
- Cheap to collect
- Difficult to evade
- Efficient, Non distortion e.g. if taxes are too high people may be put off working
- Easy to understand
Types of Tax-Tax as a % of GDP 1994
Fr 44% , G 42%, Japan 28% Netherlands 47%, UK 33%, USA 32%
Negative Income Tax
This is a progressives system of tax and benefits designed to reduce relative poverty. Those on low incomes are a given benefits, as income increases, the benefit decreases. After a certain level of income people will start paying tax.
Types of Taxes
- Airline tax
- Carbon Tax
- Cigarette Tax
- Death Tax
- Fat Tax
- Income tax
- Petrol tax
- Plastic bag tax
- Poll Tax
- Rubbish tax
- Tobin Tax
Essays and Revision Notes on Inequality
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