1. THE ROLE OF GOVERNMENT AND TAXATION
UNIT 22

2. HOW DO THESE PEOPLE RELATE TO DIFFERENT TYPES OF ECONOMIC SYSTEMS?

3. WHAT’S THE DIFFERENCE BETWEEN LEFT/RIGHT? MATCH THE SYMBOLS.

4. WHO WOULD MAKE SUCH STATEMENTS? LEFT OR RIGHT?
Government should not waste too many resources on art and education.
Those who are unable to provide for themselves should not rely on government’s help.
I am conservative.
I believe marijuana should be legalised.
It’s not fair that in times of crisis some people are getting richer and the others are getting poorer.
I’m a war veteran.
I am pro-life.
I believe in a small government.
Money is the main indicator of someone’s success.
I am open-minded.
I believe in God.
I don’t believe the politicians.
I am against homosexual marriages.
I listen to music with socially engaged lyrics.

5. ARE YOU LEFT OR RIGHT?
If you’re interested in finding out, do the following questionnaire.

6. THE ROLE OF GOVERNMENT LEFT-WING VIEWS
central political and economic issue in
industrialized democracies in the past three
decades
LEFT-WING VIEWS
The government has an essential role in:
providing the economic infrastructure (public transport, telecommunications, and so on)
providing services such as education, health care, social security and perhaps housing
regulating working conditions, health and safety standards, and so on

7. THE ROLE OF GOVERNMENT RIGHT-WING VIEWS
most of these activities can be left to
private enterprise and the market
system
too much regulation is bad for
business and leads to inefficiency
the role of government should be restricted to activities such as: defence
the police
the justice system
Is there too much or too little government in your
country, unnecessary laws, or not enough laws?

8. HOW DOES THIS CARTOON COMMENT ON THE ROLE OF GOVERNMENT IN A COUNTRY’S ECONOMY?

9. FOOD FOR THOUGHT…
Some people argue that governments have too much power, that they interfere with market forces, and that too much regulation is bad for business.
Do you think that any of the following tasks should not be undertaken or regulated by the government, but should be left to the private sector and the market system?
Education
Health care
Housing
Working conditions (working hours, child labour, minimum wages, etc.)

10. Social security (unemployment and sickness benefits, old age pensions)
Defence (the armed services – army, navy, air force)
The police, the justice system, prisons, and so on)
Public transport (trains, buses, and so on)
Traffic regulations (the driving test, speed limits, seat belts, the alcohol limit, parking restrictions, the size and weight of lorries and trucks, the safety of cars, etc.)

11. Health, safety and cleanliness regulations (shops, factories, restaurants, food, medicines, the disposal of chemical and nuclear waste, and so on)
The sale of alcohol, drugs, guns, and so on
The press, broadcasting, the arts, entertainment, and the freedom of expression (sex, violence, blasphemy, politics, and so on)

12. READING – THE GOOD LIFE BECKONS, RB, p 36
I Read the extract from a talk by J.K. Galbraith and
answer the question: What areas does Galbraith
describe as responsibilities of the state?
II Read the text again and answer these questions:
1 What does Galbraith say about people who criticise
government services?
2 Why, according to Galbraith, is the market system not
sufficient to guarantee scientific research?
3 According to what you have read, how would you
characterize Galbraith’s politics?

13. READING – THE GOOD LIFE BECKONS, RB, p 36
III Read the definition of the welfare state: “A political system based on the premise that the government has the responsibility for the well being of its citizens, by ensuring a minimum standard of living for everyone.”
What is the term that Galbraith uses for the same
concept?

14. READING – FREE TO CHOOSE – MK, p 110
I Read the extract from MK, p 110 and answer the
following questions:
What do Milton and Rose Friedman think should be the responsibilities of the state?
Which areas should, according to them, be free from the government intervention?
According to what you have read, how would you characterize the Friedmans’ views?

15. READING SUMMARY – MK & RB
J.K. GALBRAITH believes that it is the role of state
to... because the market system…
MILTON AND ROSE FRIEDMAN, on the contrary…
They regret that we are not free to…
JOHN MAYNARD KEYNES (1883 – 1946)
A British economist whose ideas on financial matters influenced much of the thought on economics during the 20th century.
In recession the economy can be made to grow and unemployment reduced by:
increasing government spending, even if this causes a budget deficit
making reductions in interest rates (cost of borrowing)
Is Keynes closer to the Friedmans or J. K. Galbraith in his beliefs?

16. HOW DOES DAVID CAMERON SEE THE ROLE OF GOVERNMENT?
1 Watch the video and take notes.
2 Which presentation skills have
you noticed?

17. TAXATION ‘In this world nothing can be said to be certain except
death and taxes!’
BENJAMIN FRANKLIN ( ) one of the Founding Fathers of the
United States of America, political theorist, politician, scientist, inventor,
statesman, and diplomat

18. TAXATION DO NOT FORGET THAT…
The last sum of money you received had probably already been taxed, or will be liable to taxation, depending on which country you are in. Similarly, the last sum of money you spent probably included a percentage of tax.
MAKE A LIST OF ALL THE DIFFERENT TAXES YOU CAN THINK OF.
If you do not know their actual names, try to describe the different taxes, e.g. ‘Tax you pay if you import something from another continent.’, and so on.
The following pictures might help you:

19. TYPES OF TAXES – MK, p 112 VOCABULARY
Which different taxes can you name?
The same amount of money can be taxed more than once. Can you give any examples of this?
Do the vocabulary task and compare your answers.
DISCUSSION
1 Which of the taxes above do you have in your own country?
2 Is there a flate rate of income tax (the same for everybody)
or is it progressive? Whiych system do you prefer?
3 Do you prefer direct or indirect taxes?

20. WORD PARTNERHIPS – TAX
ADD TAX AND/OR TAXATION BEFORE OR AFTER THE FOLLOWING
WORDS:
……..AUTHORITIES……… ……LOOPHOLE……
....…..AVOIDANCE……… ……LOSS……………
……..CONSULTANT……… ……PAYER……………......
……..CORPORATION…… ……PROGRESSIVE……...
……..DEDUCTIBLE…… ……REGRESSIVE………..
……..DIRECT………… ……RETURN…………
..…...EVASION……… ……SALES…………
.…....FREE…………… ……SHELTER………
…….HAVEN………… ……YEAR…………
.……INCOME……… ……RELIEF………
…….INDIRECT……… ……BREAK…………
…….INSPECTOR………….

21. USE THE CORRECT FORM OF THESE VERBS IN THE FOLLOWING SENTENCES:
avoid be liable deduct evade levy
lower pay raise
If you inherit a lot of money, you……………………….....for capital transfer tax.
In some countries, employers have to………………………......tax from your pay and ………………………… directly to the tax authorities, so employees have no possibility of ……………………………. income tax.
Some people hire expensive accountants to tell them how to ……………………………. taxes – legally, of course!
The government always tries to …………………………. taxes in the year before elections.
The government has a huge deficit and is going to have to ……………………………. either the arte of VAT or income tax.
The government …………………………… special taxes on petrol, alcohol and tobacco.

22. TAXATION BASICS - HANDOUT
THE FUNCTIONS
OF TAXATION
to___________ revenue to finance government ___________
indirect excise duties –
to discourage people from
___________ and
___________
to encourage capital ___________ to reduce their tax bills
THE ADVANTAGES AND
DISADVANTAGES OF
DIFFERENT TAX SYSTEMS
PROGRESSIVE
TAXATION – people who
___________ more spend
larger proportion of their
___________ on income tax
REGRESSIVE
TAXATION - people who earn
less, spend larger___________
of their income on consumption
through ____________ tax

23. WHAT DOES THIS CARTOON TELL US ABOUT THE FUNCTIONS OF TAXATION?

24. TAXATION BASICS - HANDOUT
TAX EVASION - making
___________ declarations to
the tax ___________, trying
___________ not to pay tax
BLACK OR UNDERGROUND
ECONOMY - accounts for more than ___________ of national income in some countries (especially small and medium-sized family ___________)
MOONLIGHTING - undeclared, ___________ evening jobs

25. TAXATION BASICS - HANDOUT
TAX AVOIDANCE -
_____________ the amount of
tax you pay to a legal minimum
SORT OUT THE WORDS FROM
THE BOX ON THE RIGHT.
AVOIDING TAX ON SALARIES
AVOIDING TAX ON PROFITS
LOOPHOLES IN TAX LAWS
TAX LOSS
PERKS OR BENEFITS
MONEY LAUNDERING
TAX SHELTERS
TAX-DEDUCTIBLES
TAX HAVENS

26. TAXATION BASICS – T/F?
Taxes can be designed both to encourage and discourage spending.
The same amount of money can be taxed more than once.
Progressive taxes can discourage people from working extra hours.
Sales taxes are unfair because poor people spend more than the rich.
More than 50% of national income in Italy escapes taxation.
Loopholes are a common form of tax evasion.
If you pay a lot of your income into a pension fund or a life insurance policy you never have to pay tax on it.
If a company invests in new machinery or equipment, this reduces the amount of taxes it has to pay at the end of the tax year.

27. TAXATION BASICS - RECAPPING
EXPLAIN THESE TERMS: A
raise revenue for government expenditure
indirect excise duties
capital expenditure B
taxing business profits
progressive income tax
regressive sales tax C
black or underground economy
moonlighting
EXPLAIN THESE TERMS: D
perks
loopholes in tax laws
tax shelters
tax-deductible E
a tax loss
a tax haven
money laundering

28. TAXATION AND GOVERNMENT SPENDING – MK, p 113
I READING – Read the statements. Which of them are in favour of
taxation and government spending, and which against? Which of
the statements do you find the most convincing, and why?
In favour
Against
II PARAGRAPH WRITING
Write a short paragraph summarising the most relevant arguments for and against taxation and government spending, preferably with a conclusion coming down on one side or the other.