Photo AI
Irish citizens contribute both direct taxes and indirect taxes to the government - Leaving Cert Economics - Question 5 - 2016
Question 5
Irish citizens contribute both direct taxes and indirect taxes to the government. (i) Explain each of the underlined terms and state one example of each. (ii) Outl... show full transcript
Worked Solution & Example Answer:Irish citizens contribute both direct taxes and indirect taxes to the government - Leaving Cert Economics - Question 5 - 2016
Step 1
Explain each of the underlined terms and state one example of each.
Answer
Direct taxes are taxes imposed directly on individuals or organizations, based on their income or wealth. An example of a direct tax is Income Tax, which is levied on the earnings of individuals.
Indirect taxes are taxes that are applied to goods and services, which consumers pay indirectly as part of the purchase price. An example is Value Added Tax (VAT), which is added to the cost of most goods and services.
Step 2
Outline two uses of taxation revenue by the government.
Answer
-
To provide revenue for the government: Taxation revenue is crucial for funding essential public services such as healthcare, education, and policing. This helps maintain the infrastructure needed for a functioning society.
-
To help redistribute income: Taxation can be used to decrease income inequality by collecting higher taxes from wealthier individuals and providing social welfare programs to those in need, ensuring a fair distribution of resources.
Step 3
The Irish government may consider introducing a sugar tax to address the obesity crisis. Discuss two arguments for or against the introduction of a sugar tax.
Answer
-
Arguments in Favor of a Sugary Tax:
- Revenue for the government: A sugar tax could generate significant revenue that can be used to improve public health services.
- Reduction in sugary food consumption: By increasing the price of sugary products, the tax may discourage consumption, leading to better health outcomes and fewer obesity-related conditions in the population.
-
Arguments Against a Sugary Tax:
- Higher prices for consumers: This tax could lead to increased prices for sugary foods, disproportionately affecting lower-income families.
- Job losses in the food industry: If demand for sugary products decreases, there might be job losses in sectors dependent on these products, leading to broader economic implications.
Step 5
Explain one possible economic effect which reductions in the USC rates may have on employees.
Answer
Reducing the rates of the USC may result in higher disposable income for employees. With lower deductions from their income, employees can spend more on goods and services, which may stimulate economic activity.
Step 6
Explain one possible economic effect which reductions in the USC rates may have on imports into Ireland.
Answer
A reduction in USC rates can increase disposable income for consumers, leading to higher demand for imported goods. As consumers have more purchasing power, they may choose to buy more foreign products, which could increase the volume of imports into Ireland.
Step 7
Explain one possible economic effect which reductions in the USC rates may have on the level of employment in Ireland.
Answer
Reduced USC rates may encourage employers to expand their workforce due to lower overall labor costs, as potential future employee-related expenses will decrease. This might lead to an increase in job creation and a reduction in unemployment rates.
Step 8
Step 9
State and explain two possible economic advantages for Ireland of this fall in unemployment.
Answer
-
Increase in Standard of Living: As unemployment falls, more individuals are earning wages, leading to increased disposable income and improved living conditions.
-
Reduced Social Welfare Cost: With fewer people unemployed, the government spends less on social welfare programs, allowing for reallocation of resources to other areas such as infrastructure or education.
Step 10
Suggest one measure the Irish government could take to reduce youth unemployment.
Answer
The Irish government could introduce subsidized work placements or internships aimed at youth, providing them with the necessary experience and skills to increase their employability in the job market.