Taxation

Assess the view that raising direct taxes to finance an increase in government spending is better than raising indirect taxes.

Table 1 shows the effect of cash benefits and taxes on household incomes in the UK in 2020–21.

_{Source: Office for National Statistics}

Which one of the following can be concluded from the data in Table 1 regarding the distribution of income between the top and bottom quintile of households?

Table 2 shows the amount paid in tax by individuals at different levels of income.

This tax is an example of a

Which one of the following is correct for a proportional tax on income?

Do not answer Context 2 if you have answered Context 1.

Using the data in Extract D (Figure 3), calculate, to the nearest pound, the amount of income tax payable for someone in Scotland earning £13 500.

Extract F (line 1) states ‘In most of the UK, reducing the budget deficit has focused on austerity rather than tax rises.’

Using the data in the extracts and your knowledge of economics, evaluate the view that there is a strong case for significant increases in UK income tax rates.

Evaluate the economic consequences for the UK economy of a significant shift in the burden of taxation from direct taxes to indirect taxes.

The table below shows the marginal income tax rates in an economy for 2016.

Table: Marginal income tax rates for every $1 of income

How much income tax would be payable by someone earning $40 000 in 2016?