Nowadays,
the government collects over £400
billion in taxes each year with the average person contributing
about £7000 of that.
There are
many different kinds of taxes we pay, but the biggest one is probably
income tax. This is paid
according to how much we earn.
We also pay
tax on things we buy - value added tax,
(also know as VAT) for instance.
On some items we pay more tax than others. Cigarettes and alcohol carry
heavy taxes because the government either wants to discourage people from
spending money on them or they are considered a ‘luxury’ through
which a higher rate of money per item can be raised. Education and basic
foods, however, have no tax on them because they are essentials.
So, what
does the government do with all the tax we give them?
Well, they spend it on services that we need. For example, education.
The money for teachers’ salaries, school buildings and even the
pencils and stationery used in the classroom comes mostly from our taxes!
Tax also
pays for things like health services, defence, social services, roads,
and law & order_ So you can see, if we didn’t pay taxes, the
country wouldn’t be in very good shape!
One of the biggest problems the Government has with taxation is the cost
of collecting it. To keep this as low as possible, much of the work of
tax collection is done
by the tax payer. Income tax
is a serious business and there are whole departments checking that we
all pay our fair share. The penalties for avoiding tax altogether can
be quite serious: heavy fines, or even going to jail in the most extreme
cases.
So
it’s important to budget and even to save for taxes - perhaps not
just yet, but certainly when you leave school!
Source
- The Chartered Institute of Taxation
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