Basic understanding of taxation

[Annie]

Purpose of taxation in a modern economy
 Economic purpose = is to finance government spending

 Social purpose
• Progressive = Tax rates are higher at higher income / profits
• Regressive = Tax rates are lower for lower income / profits

[Hafiz]

Annie can you confirm if your definition or my definition of regressive tax is correct.

A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases.

Thanks

[Kwasi Boadu]

Purpose of taxation in a modern economy
 Economic purpose = is to finance government spending

 Social purpose
• Progressive = Tax rates are higher at higher income / profits
• Regressive = Tax rates are lower for lower income / profits

i would like more info about f6 i,m now starting:laugh:

[Hafiz]

Hi,

information for you-

F6 Taxation TX

Examinable documents
Sample exam papers
Syllabus and study guide
Examiners' reports
Examiner's approach interview
Technical articles

here is the link for you-

[Annie]

Regressive tax is a tax that takes a larger percentage of the income of low-income people than of high-income people.

For example if a person is earning a low income but is a chain smoker he will have to bear the taxes in cigarrette which is kept high to have social control. This may not appear just and fair but if this person contracts health problems due to his chain smoking then he would utilise large portion of the governments health facilities for poor and so even if he is in the lower earning group tax would be collected at a larger percentage for his own benefit.

I hope this will make it quite clear.

[Annie]

Hi Kwasi,

surely I would help you. Please start reading and understanding the study text. As and when you have any difficulty , post it on the forum.


Annie

[Hafiz]

Thanks for the clarification.