Compare/Contrast the Tax Systems and Tax Expenditure of the Uk, Usa and Australia

6893 Words Mar 9th, 2012 28 Pages
A tax system is simply the collection of taxes in an economy. It is a sum of money paid by people or businesses to a government, to be used for public purposes. Taxes are raised through various means and the systems vary for each country. The main taxes in the UK, USA and Australia will be explained. Countries use the taxes they receive in different ways. Aims and targets of most countries vary, as does the amount of tax generated. Due to this, expenditure is prioritised and spent accordingly. Government expenditure will therefore also be discussed.

The UK Tax system

In the UK taxes are collected for a variety of reasons. A wide variety of methods are used to raise the different taxes. The UK government uses taxes to manage
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The projected revenue for 08/09 is ₤83.8billion (the third highest tax revenue source at 15.4%). There are three rates for VAT: 17.5% (standard), 5% (reduced) and 0% (zero).
Those who have to register for VAT include businesses (including sole traders). Failure to register can lead to heavy sanctions. It is compulsory for businesses with a taxable turnover of over ₤67,000 to register but those who receive less can also do so.
Goods and services liable to VAT are called ‘taxable supplies’. Those companies who have a turnover of ₤67,000 or more must charge VAT on all taxable supplies at whichever rate is applicable. “'Supplies' include day-to-day sales as well as other supplies such as the sale of business assets, items sold to employees and goods you take out of the business for your personal use.” (HM Revenue & Customs, 2008)
Lower rated supplies (5%) include fuel, power and children’s car seats. Zero rated supplies include some types of food, books and transport). Goods and services such as insurance, training, loans and some forms of education are exempt from VAT.
Once registered, HMRC are owed the difference between output tax (VAT charged to customers) and input tax (VAT charged by the supplier). If input tax turns out to be more than output tax, a refund may be received.
Consequences of registering for VAT include:
“ - VAT must be submitted to Customs and Excise
- Inspection from Customs and Excise officers

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