Fiscal Policy and Taxes

19.11.2009

Unit IV

Fiscal Policy and Taxes

Grammar: Modal Verbs.

Word building: -ly.

Text:Fiscal Policy and Taxation System.

Business practice: Presenting a report.

Interesting facts: Oxbridge.

Ex. 1 Translate the sentences into Russian:

In the absence of some form of money, exchange can take the form of barter.
The company was able to get a credit last week.
Will the plant be able to buy new equipment next year?
May I read this letter? – No, you may not. It is for the manager.
I won’t be allowed to transfer the money.
They must introduce new machinery as soon as possible.
We had to cope with a lot of difficulties last year.
He didn’t have to pay any tax last year
The economists were to give recommendations to the government.
The engineers should follow the instructions how to use the equipment.
The secretary should have typed the report.
Not all partners in a firm must take an active part in management.
All companies must pay taxes on their profits.
The prices may go up.
They will be able to increase production.
They could have earned much more.

Ex. 2 Complete the sentences using can, may or must in proper forms.

1. … developing countries enter the European Union?

2. Our firm … rent their building to start new business.

3. We … expect a return of 40 %.

4. Our plant … purchase some new equipment.

5. The businessmen … meet a few more times.

6. If there are a few firms in an industry, the change in the behavior of one firm … influence

other firms.

7. You … have a special license to import or export some goods.

8. The new government policy … provide more jobs for population.

9. Some international events … influence the stability of prices in world markets.

10. The building firm … finish the construction of the new plant this year.

11. The workers … produce the first 100 cars by the end of the year.

12. Companies trading in the world market … ensure (гарантировать) high standards.

13. By means of computer programmes economists … make more complex economic models

in future.

14. The firm was closed as it … (not) pay its debts.

15. Developing countries … (not) become economically independent until they import less

than they export.

Ex. 3 Translate the sentences into English, using modal verbs:

Работадолжнабытьвыполненанемедленно.
Им не следовало бы заключать этот договор.
Должен ли я начать эту работу сейчас же?
Мне предстоит завтра делать доклад.
Вы должны нанять лучшего менеджера.
Думаю, Том должен получить эту работу. У него есть все данные для этого.
Вы получите ваш заказ завтра.
Каждый потребитель должен решить проблему выбора.
Ему, наверное, не сказали, когда начнется собрание.
Питер был не в состоянии сделать эту работу за две недели, поэтому Майкл должен был помочь ему.
Эту систему можно легко применить к другому банку.
Не следует ничего откладывать на потом.
Не следует недооценивать имеющиеся проблемы.
Правительство должно принять этот закон, чтобы снизить уровень безработицы.
Нужно повысить цену на 1 процент для сохранения прибыли на том же уровне.
Мы должны были закончить эту работу в прошлом месяце.

Ex. 4 Write these sentences in Present, Past and Future Simple Tenses, using modal

verbs and their equivalents:

1. He can do this work himself.

2. You may ask the manager to help you.

3. We must sign this contract as soon as possible.

Ex. 5 Translate the sentences into Russian paying attention to Modals:

1. Any crisis in the economy of the USA can seriously influence the economies of other

nations.

2. Any country must follow some rules in international trade.

3. As the demand for this good is low, the producer has to decrease the price for it.

4. Members of the OPEC are to sell oil at the same price.

5. Prices can be increased by the government next year.

6. The French businessmen are to be met at the airport tomorrow.

7. Nearly 1,000 workers are to loose their jobs in our factory.

8. All the new teachers coming out of universities should know something about

computers.

9. People will have to be prepared to work in the world of rapid evolution.

10. People in the company have to be able to find information easily.

Ex. 6 Read Text A. Find international words in the text and give their translation.

WordstotheText A:

fiscal policy, n финансоваяполитика

e.g. Tax increases cannot remain the only instrument of fiscal policy.

referto, v иметьотношение,

относиться

e.g. The figures in the left-hand column refer to our sales abroad.

contractionary, a жесткий ( ополитике)

e.g. acontractionary fiscal policy

revenue, n доход

e.g. The government usually receive revenue from taxes.

surplus, n излишек, остаток

e.g. an enormous surplus of crude oil

budgetsurplus, n бюджетный избыток

(превышение доходов над расходами)

e.g. The government, which is running a budget surplus must spend billions of dollars to build

roads and other infrastructure to improve the quality of life.

budgetdeficit, n дефицит бюджета

(превышение расходов над доходами)

e.g. Any savings on military spending should be used to reduce the budget deficit.

balanced budget, n сбалансированныйбюджет

e.g. New York state has failed to achieve a balanced budget in six of the past eight years.

occur, v случаться, происходить,

иметь место

e.g. Climatic changes have occurred at intervals throughout the millennium.

adjust, v регулировать

e.g. Their monthly repayments are adjusted once a year

VAT ( valueaddedtax), n налог на добавленную

стоимость (НДС)

e.g. Final customers pay VAT on goods in shops and on services.

tax, n налог, пошлина

e.g. The government claimed it would lower taxes.

taxburden, n бремяналога

e.g. People can’t bear so hard tax burden.

taxrate, v налоговаяставка

e.g. In countries with very high tax rates many people prefer to stay unemployed.

to collect taxes, v syn. to raise taxes взимать (собирать) налоги

e.g. It should be noted that at the national level government collect (raise) such taxes as

income tax and VAT (value added tax).

taxrevenues, n налоговыепоступления

e.g. Tax revenues were not as big as the government had expected.

bond, n облигация

e.g. My father put all his money into Canadian Northern Railway bonds.

toissuebonds, v выпускатьоблигации

e.g. The company decided to issue bonds in order to receive additional capital.

interestrate, v процентнаяставка

e.g.Theinterest rate on the loan is 16,5% per year.

cause, v бытьпричиной,

вызывать

e.g. Heavy traffic is causing long delays on the freeway.

unemployment benefit, n пособиепобезработице

e.g. High unemployment rate in Europe is the result of high unemployment benefits.

welfare, n благотворительность

e.g. The company’s welfare officer deals with employees’ personal problems.

GDP (Gross Domestic Product), n валовыйвнутренний

продукт (ВВП)

e.g.Canada’s annual growth in GDP will decline to about 1% next year.

expenditure(s), n затраты, расход(ы)

e.g. The total expenditure on defense has dropped since 1989.

Text A

Fiscal Policy and Taxation System

Fiscal policy refers to government attempts to influence the direction of the economy through changes in government taxes, or through some spending.

The goal of fiscal policy is to keep price level stability, full employment, and the achievement of the natural level of GDP.

The two main instruments of fiscal policy are government expenditures and taxes. The government collects taxes in order to finance expenditures on a number of public goods and services – for example, highways and education.

The three possible cases of fiscal policy are neutral, expansionaryand contractionary:

- A neutral fiscal policy exists when government expenditures are exactly equal to tax revenues in a given year, the government is running a balanced budget for that year.

- When government expenditures exceed government tax revenues in a given year, the government is running a budget deficit for that year. The budget deficit, which is the difference between government expenditures and tax revenues, is financed by government borrowing ( the government issues of bonds and shares). Then expansionary fiscal policy exists.

- A contractionary fiscal policy occurs when government expenditures are less than tan tax revenues in a given year, the government is running a budget surplus for that year. The budget surplus is the difference between tax revenues and government expenditures.

A tax is a financial charge imposed on an individual or a legal entity by a state.Taxes consist of direct tax or indirect tax, and may be paid in money or as its labour equivalent.

In modern taxation systems, taxes are levied in money. The method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics.

Funds provided by taxation have been used by states to carry out many functions. Some of these include expenditures on war, economic infrastructure (roads), public works, and the operation of government itself. Most modern governments also use taxes to fund welfare and public services. These services can include education systems, health care systems, pensions for the elderly, unemployment benefits, and public transportation.

Governments use different kinds of taxes and vary the tax rates. This is done to distribute the tax burden among individuals or classes of the population involved in taxable activities, such as business, or to redistribute resources between individuals or classes in the population.

A nation's tax system is often a reflection of its communal values. To create a system of taxation, a nation must make choices regarding the distribution of the tax burden - who will pay taxes and how much they will pay - and how the taxes collected will be spent. In democratic nations where the public elects those in charge of establishing the tax system, these choices reflect the type of community which the public wishes to create. In countries where the public does not have a significant amount of influence over the system of taxation, that system may be more of a reflection on the values of those in power.

Ex. 7 Arrange the following words in pairs of synonyms:

Effort, effect, country, recession, encourage, essential, attempt, outcome, state, fall, stimulate, important, implement (v), displacement, exist, release, reason, perform (v), removal, live, issue, cause.

Ex. 8 Arrange the following words in pairs of antonyms:

Destroy, abundance, reduce, high, effect (n), impossible, spending, exclude, deficit, lack, create, increase, low, cause (n), possible, revenue, involve, surplus.

Ex. 9 Say instead of what words the pronouns that/those are used. Translate these

sentences into Russian.

The prices are much lower than those quoted previously.
The result of the calculation is a little bit different from that presented yesterday.
The output has increased 2% as compared with that last year.
Credit risks are bigger than those under the previous loan agreement.
The goods sold in the market are of lower quality than those of our company.
Students studying economics can expect higher earnings than those of studying philosophy.
In a country like Japan the output of private goods is large and that of social services small.

Ex. 10 Form adverbs by adding the suffix –ly and give their Russian equivalents:

Easy, real, full, deep, probable, natural, recent, relative, personal, annual, free, narrow, bad, quick, slow, part, week, first, late, continuous, technical, scientific, regular, exact, dramatic.

Ex. 11Make word combinations from the given verbs and adverbs from Ex. 10. Write

them down and translate.

to provide services

to collect taxes

to have meetings

to run a business

to influence

to visit friends

to exceed revenues

to be equal to

to meet expectations

to carry out functions

to vary tax rates

to fund welfare

to redistribute resources

to make choice

Ex. 12 Find English equivalents in Text A.

правительственныерасходы
жесткаяналоговая политика
связанный с дефицитом бюджета
влиять на уровень совокупного спроса
ценовая стабильность
регулирование правительственных расходов
в периоды высокого экономического роста
периоды спада
увеличение процентной ставки
высокий спрос на кредиты
привести к инфляции
полная занятость
нормальный уровень ВВП
возможные случаи
управление сбалансированным бюджетом
управление дефицитным бюджетом
управление бюджетным излишком
финансовые расходы
общественные работы
отражение общественных ценностей
ответственный за создание налоговой системы

Ex. 13 Say if it is true or false. Correct false statements, using the following phrases: I’m

afraid it’s not correct, as far as I know, I don’t really agree etc.

Neutral fiscal policy exists when government spending is fully funded by tax revenue.
Expansionary fiscal policy leads to a lower budget deficit .
During periods of high economic growth taxes can be used to decrease activity in the economy.
Governments usually fund a budget deficit with the release of government bonds.
There is no any lag (отставание) between the implementation of the policy and detectable effects in the economy.

Ex. 14 Fill in the gaps with prepositions.

Fiscal policy refers … the overall effect … the budget outcome … economic activity.
Expansionary fiscal policy is usually associated … a budget deficit.
Fiscal policy is used … governments to influence the level … aggregate demand … the economy.
The removal … funds … the economy will reduce levels … aggregate demand … the economy and contract it.
When governments fund a deficit … the release … government bonds, an increase … interest rates … the market can occur.
An unchecked spiral … aggregate demand will lead … inflation.

Ex. 15 Match parts A and B.

A B

1. A rise in the general level of prices. 1. spending

2. The money that is received by a business usually

from selling goods or services. 2. fiscal policy

3. The amount of money that is spent by a person,

a government or an organization. 3. inflation

4. The way in which a government charges taxes or

spends money in order to manage the economy. 4. interest rate

5. The amount by which money that a government

or business spends is greater than money received

in a particular period of time. 5. revenue

6. The cost of borrowing money, usually expressed

as a percentage of the amount borrowed. 6. budget deficit

Ex. 16 Give answers to the following questions according to Text A.

1. How many types of fiscal policy do you know?

2. What does an expansionary fiscal policy result in?

3. What does acontractionary fiscal policy result in?

Ex. 17 Read Text B and fill in the gaps with the given words in the correct form.

( expenditure, unemployment benefit, taxes (3), property, tax rate, resource, fiscal

policy, business, law, economy, tax system, welfare, distribution of the tax burden)

Text B

Purposes and Effects of Taxes

Funds provided by taxes have been used by states and their functional equivalents throughout history to carry out many functions. Some of these include ______on war, the enforcement (осуществление) of ___ and public order, protection of ______, economic infrastructure (roads, legal tender, enforcement of contracts, etc.), public works, social engineering, and the operation of government itself. Most modern governments also use _____ to fund ______and public services. These services can include education systems, health care systems, pensions for the elderly, ______, and public transportation. Energy, water and waste management systems are also common public utilities.

Governments use different kinds of taxes and vary the ______. This is done to distribute the tax among individuals or classes of the population involved in taxable activities, such as______, or to redistribute ______between individuals or classes in the population.

Historically, the nobility were supported by taxes on the poor; modern social security systems are intended to support the poor, the disabled, or the retired by _____ on those who are still working. In addition, _____ are applied to fund foreign and military aid, to influence the macroeconomic performance of the economy (the government's strategy for doing this is called its ______), or to modify patterns of consumption or employment within an ______, by making some transaction more or less attractive.

A nation's tax system is often a reflection of its communal values or the values of those in power. To create a system of taxation, a nation must make choices regarding the ______— who will pay taxes and how much they will pay and how the taxes collected will be spent. In democratic nations where the public elects those in charge of establishing the ______, these choices reflect the type of community which the public wishes to create. In countries where the public does not have a significant amount of influence over the system of taxation, that system is more of a reflection on the values of those in power.

Ex. 18 Read Text C and make a summary.

Notes to text:

transfer payments – передаточныеплатежи

“revenue neutral” – нейтральные доходы

construe - истолковывать

incentive – стимул, побуждение

disposable income – чистыйдоход

Text C

Fiscal policy

Fiscal policy is the use of government spending and taxation to influence the economy. When the government decides on the goods and services it purchases, the transfer payments it distributes, or the taxes it collects, it is engaging in fiscal policy. The primary economic impact of any change in the government budget is felt by particular groups - a tax cut for families with children, for example, raises their income. Discussions of fiscal policy, however, generally focus on the effect of changes in the government budget on the overall economy. Although changes in taxes or spending that are “revenue neutral” may be construed as fiscal policy - and may affect the aggregate level of output by changing the incentives that firms or individuals face - the term “fiscal policy” is usually used to describe the effect on the aggregate economy of the overall levels of spending and taxation, and more particularly, the gap between them.

Fiscal policy is said to becontractionary when revenue is higher than spending (i.e., the government budget is in surplus) and expansionary when spending is higher than revenue (i.e., the budget is in deficit). Often, the focus is not on the level of the deficit, but on the change in the deficit. Thus, a reduction of the deficit from $200 billion to $100 billion is said to be contractionary fiscal policy, even though the budget is still in deficit.

The most immediate effect of fiscal policy is to change the aggregate demand for goods and services. A fiscal expansion, for example, raises aggregate demand through one of two channels. First, if the government increases its purchases but keeps taxes constant, it increases demand directly. Second, if the government cuts taxes or increases transfer payments, households’ disposable income rises, and they will spend more on consumption. This rise in consumption will in turn raise aggregate demand.

Ex. 19 Render Text D into English.

TextD

Налоги: сущность и функции

На протяжении всей истории человечества складывалась система налогообложения. Если сначала налоги взимались в виде различных натуральных податей и служили дополнением к трудовым повинностям или формой дани с покоренных народов, то по мере развития товарно-денежных отношений налоги приобрели денежную форму.

Государство может воздействовать на ход экономической жизни, лишь располагая определенными денежными средствами. Их должны предоставить все заинтересованные в выполнении функций государства стороны - граждане и юридические лица. Для этого и существует система налогов, т.е. обязательных платежей государству.

Ни одно государство не может существовать без налогов. За счет налоговых взносов, сборов, пошлин и других платежей, формируются финансовые ресурсы государства. Налоги обеспечивают реализацию социальной, экономической, оборонной и других функций государства. Они идут на содержание государственного аппарата, армии, правоохранительных органов, финансирование образования, здравоохранения, науки. Из собранных в виде налогов средств государство строит школы, высшие учебные заведения, больницы, детские дома, государственные предприятия; платит зарплату преподавателям, врачам, государственным служащим, стипендии и пенсии. Часть средств идет на социальные пособия пожилым и больным людям, защиту здоровья матери и ребенка, окружающей среды и т.д.…

Хотя налоги чаще вызывают возмущение, чем одобрение общества, без них ни одно государство существовать не сможет.

Ex. 20 Study this information carefully and make your own presentation on any topic

according to the studied Units (I, II, III, IV).

A presentation proves that you are able to communicate on a topic of your choice with just a few key words as reminders.

What should you begin with? Prepare the structure of the talk carefully and logically. The following plan will help you.

Structure and Content

Introduction: General information on the topic
Give your listeners an introduction to the topic (some general information) and explain what exactly you are going to talk about in your presentation.
Actual Presentation
Subdivide your presentation into several sub-topics, e.g.:
Presentation on an event: history, present, special customs
Presentation on a sport: history, rules, important events
Presentation on a stay in an English speaking country: chronologically
Conclusion
Find a good conclusion (otherwise it would look as if you simply stopped in the middle of your presentation). A good conclusion could be for example:
How does the event influence our daily lives?
How important is the event for you personally? What's your opinion about it?
What might the future bring?
a quotation that summarises your presentation

Do you know?

1. Say what you know about Oxford and Cambridge.