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What do the letters PAYE stand for? Write the answer in the space provided - Leaving Cert Business - Question 2 - 2015

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What do the letters PAYE stand for? Write the answer in the space provided. PAYE Outline two main features of the PAYE tax system: (i) (ii)

Worked Solution & Example Answer:What do the letters PAYE stand for? Write the answer in the space provided - Leaving Cert Business - Question 2 - 2015

Step 1

What do the letters PAYE stand for?

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Answer

The letters PAYE stand for 'Pay As You Earn'. This term refers to a system of tax withholding where income tax is deducted from an employee's earnings before they receive their paycheck.

Step 2

Outline two main features of the PAYE tax system:

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Answer

  1. Progressive Taxation: The PAYE tax system is designed to be progressive, meaning that it imposes a heavier tax burden on those with higher incomes. This feature aims to ensure that individuals contribute to taxation in proportion to their earnings.

  2. Direct Tax System: PAYE operates as a direct tax on income earned from employment. This means that the tax is collected directly from the employer before the employee receives their salary, streamlining the tax collection process.

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