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.
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Direct Taxes: These are taxes levied on income and wealth. An example is Income Tax, which is paid directly by individuals based on their earnings.
Indirect Taxes: These are taxes imposed on goods and services. An example is Value Added Tax (VAT), which consumers pay when purchasing goods.
Step 2
Outline two uses of taxation revenue by the government.
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To Provide Revenue for the Government: Taxation revenue is essential for funding public services such as healthcare and education, ensuring the government can operate effectively.
To Help Redistribute Income: Taxes can be used to fund social welfare programs, supporting those in need and reducing income inequality.
Step 3
Discuss two arguments for or against the introduction of a sugar tax.
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Argument For: The introduction of a sugar tax could lead to increased revenue for the government, which could be utilized to fund health initiatives and programs aimed at combating obesity.
Argument Against: A sugar tax may result in higher prices for consumers, disproportionately affecting lower-income individuals who spend a larger share of their income on affected food items.
Step 4
What do the initials USC stand for?
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USC stands for Universal Social Charge.
Step 5
Explain one possible economic effect which reductions in the USC rates may have on employees.
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Reductions in USC rates may lead to increased disposable income for employees, allowing them to spend more on goods and services, which can stimulate economic growth.
Step 6
Explain one possible economic effect which reductions in the USC rates may have on imports into Ireland.
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Lower USC rates may encourage higher disposable incomes, potentially leading to increased demand for imported goods if consumers can afford to buy more from overseas.
Step 7
Explain one possible economic effect which reductions in the USC rates may have on the level of employment in Ireland.
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Reducing USC rates could encourage businesses to hire additional employees due to lower overall employment costs, thus potentially increasing the level of employment in the country.
Step 8
Name one method of measuring unemployment in Ireland.
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One method of measuring unemployment in Ireland is the Live Register, which records those who are signing on for unemployment benefits.
Step 9
State and explain two possible economic advantages for Ireland of this fall in unemployment.
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Increased Consumer Spending: As unemployment falls, more individuals earn wages, leading to increased consumer spending, which can boost economic growth.
Tax Revenue Increase: A reduction in unemployment will likely result in higher income tax revenues for the government, as more people are contributing taxes from their earnings.
Step 10
Suggest one measure the Irish government could take to reduce youth unemployment.
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The Irish government could implement subsidized work placements or internships for young people, providing them with valuable experience while encouraging businesses to hire.
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