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Government Taxes

Economics (Year 11) - The Public Sector

Carys Brown

Government Revenue

Government collect revenue through direct, indirect and non-tax revenue.

  • Direct Tax: This included income tax directed on household incomes as well as company tax. These are considered direct tax as the incidence of tax must be paid the one person or company and cannot be passed onto someone else.

  • Indirect tax: These taxes are placed on consumption goods and production. Examples include GST (Goods and services tax) and excise duties on products such as alcohol or cigarettes as the incidence of these taxes can be placed on someone else.

  • Non-tax Revenue: This includes court fees or fines.

  • Government Service Profits: Government-owned businesses such as the Reserve Bank of Australia can make profits over the year contributing to government revenue.

  • Sale of Assets: The government make money from selling assets to the private sector.

Types of Taxes

  • Progressive Tax: As the price (or income) rises, the proportion of the tax rises also. Examples include income tax.

  • Proportional Tax: As the price rises, the tax stays the same. For instance, flat income tax or company tax.

  • Regressive Tax: As the price rises, the tax falls. Examples include excise duty (tax on alcohol or petrol) and GST.

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