Taxes

About the taxation .

A wide range of taxes is levied by central and local government on firms and consumers... There are two main types of tax: One is direct tax the other is indirect tax.The definition of direct tax:one that taxes the income of people and firms and that cannot be avoided.Such as the income tax ,the corporation tax. And the definition of indirect tax :A tax levied on goods and services.For example VAT.

Let 's see what might affected by taxation. Firstly tax is in the budget of government it is a kind of government revenue.so I think if the government want to have more revenue they need to levy more tax.And if the tax more than the government spending it will be a government budget surplus.And make government richer.But you know taxation is a leakage,so in this situation it is not help to increase the real GDP.

But still it could affect our real GDP.For instance in the fiscal policies if we reduce the income tax people will have more disposable income so people will spend more.So that's will shift the AD cure to the right and it can reduce unemployment but increase the inflation.And tax is good for government to control something for example for the alcohol and the cigarette it's bad for our health so government decide put tax on those products like that ,and make the price of those products much higher,to contral the demand of the products.But we all know they are addict goods so the demand is inelastic but still put a tax may be can reduce some demand. And it is a indirect tax also ablout the VAT is almost the same thing...

And the tax on our income is called direct tax.If the income tax is higher our disposable income will be less so we will also spend less... So I already said that above... So a taxation sometime is a good thing sometime it a bad thing.Government have to consider about it very carefully.