• In Ireland, taxes are collected by the Office of the Revenue Commissioners on behalf of the government.
• Direct taxes are taxes on income (e.g. corporation tax). • Indirect taxes are taxes on expenditure (e.g. VAT). • Progressive tax means that the tax rate increases as income increases. • Regressive tax means that the tax rate increases as income decreases. • Self-employed people pay income tax through self-assessment.
• The main purpose of taxation is to raise finance for government expenditure. However, tax is also collected for social, legal and ethical reasons.
• Tax evasion is when an individual or organisation deliberately underpays or does not pay the tax they owe. It is illegal.
• Tax avoidance is when an individual or organisation uses methods to minimise the amount of tax they have to pay. It is not illegal, but it is considered unethical.
Taking stock A
Go to page 227 of your Activities and Accounts Book to check what you have learned in chapter 33.
