Governments raise the money they spend on public services through taxation.
There are three main types of taxation covered in Chance to be Chancellor 2012, including:
- Work taxes include income tax and national insurance – both are deducted directly from earnings and combined they make up around 40% of all tax the Government collects.
- Consumer taxes are collected on all goods and services such as VAT and duties on fuel, tobacco and alcohol as well as new proposals such as an ‘unhealthy food’ tax.
- Business taxes which are charged on the profits of limited companies and to earnings from investments such as bonds and stocks – they include corporation tax and the bank levy.