Lessons 33 · 1 lessons · E. Sariqov, B. Khaydarov. Foundations of Economics, Grade 8. “Huquq va Jamiyat” Publishing House, Tashkent, 2019
33
Taxes and their types
Textbook: pp. 136–139
GoalGives the definition of tax, the purposes of taxes, the uses of tax revenue, the role of the Tax Code, and distinguishes direct from indirect taxes and state from local taxes.
New words
tax: money that people and firms must pay to the state because the law requires it · soliqdirect tax: paid by the taxpayer straight to the state, for example income tax · bevosita soliqindirect tax: included in the price of goods and passed to the state by the seller · bilvosita soliqTax Code: the main law that sets taxes and the rules of paying them · Soliq kodeksi
Explanation
Money that people and firms must pay to the state because the law requires it is called a tax; paying it is not optional. Most of the state budget is collected from taxes. Taxes serve three jobs: raising money for services everyone uses, such as schools, hospitals, roads and defence; taking more from those who earn more to help people on low incomes; and helping sectors the state wants to develop by cutting their taxes (giving benefits). Taxes and other compulsory payments are set on the basis of the Tax Code of the Republic of Uzbekistan; current rates should always be checked in official sources because they change. The payer of a direct tax pays the state himself (income tax, property tax, land tax). An indirect tax is added to the price of goods: the buyer pays it in the shop and the seller passes it to the state (value added tax, excise). State taxes go to the state budget and local taxes to the local budget. There are also compulsory payments other than taxes: state duty, customs payments, fees.
Worked examples
If a school teacher earns 4 000 000 so‘m a month, with income tax at 12%: 4 000 000 · 12 : 100 = 480 000 so‘m. This is a direct tax: it is calculated on the pay and passed to the state. The teacher receives 4 000 000 – 480 000 = 3 520 000 so‘m (without other deductions).
A conditional example: the price of a good without tax is 200 000 so‘m, and the indirect tax is a conditional 10%. Tax: 200 000 · 10 : 100 = 20 000 so‘m. The buyer pays 220 000 so‘m at the till. Because the tax is built into the price, the buyer does not notice it “separately”, but pays it. (Check the current rate in an official source.)
Class activity
“Where does the tax go?”: the class writes the names of four or five services on the board (school, hospital, road, fire service, pensions), shows that each is financed from taxes and names one it has used.
Practice
1
What is a tax and who collects it?
Money that must be paid to the state because the law requires it; the state (the tax service) collects it for the budget.
2
Monthly pay is 5 000 000 so‘m and income tax is 12%. How many so‘m is the tax?
600000
3
A good costs 150 000 so‘m without tax and the conditional indirect tax is 10%. How many so‘m does the buyer pay in total?
165000
4
What is the main difference between a direct and an indirect tax? Give one example of each.
A direct tax is paid by the taxpayer himself to the state (income tax); an indirect tax is included in the price and passes through the seller (value added tax).