UNIT 8. Finances. Taxes as the main source of governmental income

Grammar. Modal Verbs

Text 1. ABC of the economic issues

Text 2. Taxes

Exercise 1. Read the basic text and discuss the main economic issues.

Text 1. ABC of the economic issues

Vocabulary

investment	вложение денег
to pay interest	выплачивать проценты
interest rate	процентная ставка
break even	достигать уровня безубыточности
turnover	иметь оборот
raw materials	сырье
overheads	накладные расходы
to thrive	преуспевать
expenditure	расходы

A) Banks and businesses

Most businesses need to borrow money to finance (= pay for) investments (= things they need to buy in order to help the company, e.g. machines). The money they borrow from the bank is called a loan, and on this loan they have to pay interest, e.g. if you borrow £ 1, 000 and the interest rate is 10%, then you have to pay back £ 1, 000, plus £ 100 in interest.

В) Businesses and profit

One of the main aims/objectives (= the things that you hope to do/achieve) of a company is to make a profit (= earn/receive more money than it spends) (≠ make a loss ). If a company does not make a profit or a loss, it breaks even.

Most companies are happy if they can break even in their first year of business.

Companies receive money from selling their products - this money is called the turnover. The money that they spend is called the expenditure . They spend money on these things: raw materials (= materials in their natural state used to make something else, e.g. coal and oil are important raw materials used to make plastics); labour (= employees); overheads (= necessary costs for a company, e.g. rent for buildings, electricity, telephone)

С) Rise and fall

Business people often need to talk about the movement of sales, prices, interest rates, profit and loss, etc. Here are some of the words used to describe these trends (= movements):

rise / go up / increase

rise slowly (also gradually)

rise sharply

fall / go down

fall slowly

go down sharply

Note: rise, increase, and fall are also used as nouns: a slow rise in interest rates, a steady increase in sales, a sharp fall in profits, a dramatic (= sharp) rise in inflation. We can also use be up/down: prices are up by 10%; profits are down by £ 2 million.

D) Businesses and the economy

In order to grow/expand (= get bigger) and thrive/prosper (= do well / be successful), many companies want or need the following:

low inflation, so prices do not go up

low interest rates, so the company can borrow money without paying a lot of interest

economic and political stability (= things remain steady and stable and there are no sudden changes in the economic and political situation)

a healthy/strong economy (= in good condition), and not an economy in recession (= in a period of reduced and slow business activity)

tax cuts (= tax reductions / lower taxes), so they can keep more of their profit. This often depends on government expenditure, e.g. The government will not be able to reduce taxes if public expenditure continues to rise.

Exercise 2. Choose the appropriate word to the given definitions.

1. Money you borrow from a bank for your business. 2. What you must pay the bank if you borrow money. 3. The continuous increase in the price of things. 4. The things you hope to do/achieve within a period of time. 5. When a company does not make a profit or a loss. 6. When an economy is in a period of reduced and slow business activity.

Exercise 3. Replace the underlined words with synonyms.

1. There has been a slow rise in sales. 2. This comes after a dramatic fall last year. 3. Fortunately the company is doing well now. 4. And it's growing very quickly. 5. This is one of their main objectives. 6. Profits have risen considerably.

Exercise 4. Study the diagram and complete the sentences.

1. In 2005 sales.... 2. In the following year they…. 3. In 2003 there was a... in sales. 4. In 2010 business improved and there was a.... 5. And in 2002 sales…. 6. In the five-year period sales... by 40, 000.

Exercise 5. Answer the questions.

1. What is the current inflation rate? 2. If you borrowed $10, 000 from your bank, what would the interest rate be approximately? 3. What is the state of the economy at the moment? Is it strong? Is it in recession? 4. Do you think businesses are optimistic about the future? 5. Has the government reduced company taxes or personal taxes in the last twelve months?

Exercise 6. Read the text and give the written translation of it.

Paula and Maria are both financial dealers but neither of them are millionaires. Maria sometimes earns £ 400 a month, which is not much in the world of international business. Her job is very stressful. None of the people in my company get to work later than 8.15, ' she says. Both Maria and Paula like breakfast. Paula has hers at the office (a cup of tea, fruit and vegetables). All of her customers do business by computer. Maria's customers want to know if prices are up or down and all of them use computers too. So both the financial dealers, Maria and Paula, are at their computers all morning. None of our customers write letters now, ' says Paula. 'Everything is on the computer. Both of the dealers often leave the office in the afternoon. Maria talks business with customers at a coffee shop. Paula goes to other offices. Both women go to bed at midnight. Maria often works in the evenings on her computer at home, but Paula doesn't.

Exercise 7. Replace the word combinations in italic with the word combinations from the table.

in a sale, pay you back, save up, in debt, second-hand, be well-off, annual income, can't afford it

a) Kate's car was owned by someone else before her.

b) We're not going on holiday this year, because we are short of money.

c) Don't worry, next week I'll give you the money you lent me.

d) We decided to put money aside so we could buy a small boat.

e) I don't want to end up owing a lot of money to the bank.

f) What exactly is the amount of your earnings every year?

g) I bought my DVD-player when the prices were reduced.

h) Mary used to have a lot of money, but she's quite poor now.

Exercise 8. Choose the appropriate word.

a) Dora earns / gains / wins more money in her job than I do.

b) The factory workers asked for a rise in their income / reward/ wages.

c) Paul borrowed / lent / loaned some money from me but didn't pay it back.

d) I'm sorry, but we don't accept credit cards, only cash / coins / money.

e) Is it all right if I pay with cheque / by cheque / from cheque?

f) We don't exchange goods unless you still have the bill / cheque / receipt.

g) I'm afraid I've only got a £ 50 note. Do you have change / money / rest?

h) I still debt /owe /own the bank more than £ 5000.

Exercise 9. Complete the sentences with the given words.

sales	credit	cash	creditors	debtors
VAT	growth	production	stock	tax

1. A company plans how much money it wants to make in the coming year by setting a... target.

2. To determine what a company actually has in its warehouse without physically counting the items, a company must keep... records.

3. The Inland Revenue authorities need to see a company's... records usually once a year.

4. The... target shows how many items a company intends to make in a given period of time.

5. Customs and Excise Department inspect a company's... records, which have to be kepi for six years.

6. The planned increase in sales and profits for nest year over those for this year is the... target.

7. A retailer's record of the cash - not the cheques or other forms of credit—that he receives and spends every day is shown by his … sales records.

Exercise 10. Complete the sentences with the words from the table.

account company enterprise market price claim currency figures payment venture

1. John became rich by playing the stock ___. 2. We have decided to turn our business into a limited ___. 3. This government believes firmly in the value of free ___. 3. I am interested in buying the property, but I find the ___ too high. 4. I am saving money to make the down ___ on a new car. 5. We put in an insurance ___ after our house was damaged in a storm. 6. Everyone was impressed with the sales ___ for the new product. 7. Margaret lost a lot of money in an unwise business.... 8. I keep most of my money in a savings ___. 9. Our company receives a lot of payments in foreign ___.

Exercise 11. Find the synonymic sentences.

We have to haggle	A	We spend a lot.
We have a nice little nest-egg	B	We don't waste money.
We have high expenditure	C	We let people borrow from us.
We get in free	D	We earn according to what we sell.
We are in debt	E	We argue about the price.
We are very thrifty	F	We earn a lot.
We are paid on commission	G	We don't have to pay.
We want a rise	H	We need higher wages
We lend money	I	We owe money.
We have a high income	J	We have some savings.

Exercise 12. Replace the underlined words with the words from the table.

agenda chair expense handle takings bargain charge fortune income unavailable

1. Sheila made a lot of money selling used cars. 2. When Mark took his new job, his earnings nearly doubled. 3. The cost of moving house was another problem for us. 4. We need someone else to be in charge of the meeting. 5. I am afraid this product is temporarily out of stock. 6. We usually count the money we have made when the shop closes. 7. Do you like my new dress? It was a very good price. 8. We don't deal with goods of that kind in this company. 9. Don't forget to makeup the list of items to be discussed for the next meeting. 10. We make no request for payment for delivery in the London area.

Exercise 13. Choose a words from the table and change one word in each sentence to make its meaning opposite.

appreciate hard up prosperous rise wasteful dear make purchase squander worthless

1. The precious stones our company mines are now known to be priceless.

2. Nigel cannot get used to being an unsuccessful businessman.

3. The company has decided the sell the premises in East Road.

4. I like living in this part of town. Of course, it's very cheap!

5. Jim inherited £ 20 000 and managed to save it all.

6. We were poor when I was young and my father was very thrifty.

7. At the moment house values tend to go down in this area.

8. The workers were given a cut in wages when the takeover was announced.

9. Nobody thought that the company would lose a lot of money.

10. Richard's family is incredibly well-off.

Exercise 14. Match the examples (a-n) and their grammatical form (1-14).

a) a/an, the ___

b) at, to, for ___

c) do, have ___

d) can, must ____

e) If you do that, I'll _____

f) she, someone, myself _____

g) all, some, both, either _____

h) past simple, present perfect _____

i) What's your name? Where do you live? _____

j) happy, Important, good _____

k) slowly, carefully, well _____

l) get up In the morning, look up a word _____

m) The letter that arrived this morning is for you _____

n) It is made of wood. The book was written in 2010 _____

verb tenses	conditional sentence
auxiliary verbs	passive voice
modal auxiliaries	phrasal verbs
pronouns	articles
prepositions	determiners
questions	relative clause
adjectives	adverbs

Exercise 18. Match the tense constructions marked italic with their names.

a) Helen is leaving first thing in the morning. b) I've been studying English for two years. c) If I had a helicopter, I'd get to school more easily! d) I get up at 7.30 every day. e) Next year I'll be taking my final exams at university. f) By the time we got to the station, the train had left. g) I've lived in Athens all my life. h) While I was walking along the street a dog ran in front of a car.

present simple	present perfect
past simple	past perfect
present continuous	present perfect continuous
past continuous	future continuous

Exercise 19. Match the information from the column I with the information from the column II.

I	II
	A tax is a financial charge imposed on	A	such as health care or unemployment benefits
	Governments use different kinds of taxes	B	on a pay-as-you-earn basis.
	Taxes are used to fund public services	C	and vary the tax rates.
	Personal income tax is often collected	D	an individual or a legal entity by a state.
	Governments vary the tax rates	E	to redistribute resources in the population.

Exercise 20. Read the text and answer the questions:

1. What is taxation? 2. Who is tax collection performed by? 3. Where does the tax money go? 4. Why do governments vary tax rates? 5. What kinds of taxes are mentioned in the article? Can you add to the list?

Text 3. Taxes

Vocabulary

levy	сумма обложения
legal entity	юридическое лицо
burden	накладные расходы
voluntary	добровольный
donation	денежное пожертвование
contribution	взнос
welfare	социальное обеспечение

A tax is a financial charge or other levy imposed on an individual or a legal entity by a state. A tax may be defined as a " pecuniary burden laid upon individuals or property to support the government a payment exacted by legislative authority." A tax is not a voluntary payment or donation, but an enforced contribution and is any contribution imposed by government.

Tax collection is performed by a government agency such as the Internal Revenue Service (IRS) in the United States, or Her Majesty's Revenue and Customs (HMRC) in the UK. When taxes are not fully paid, civil penalties or criminal penalties may be imposed on the non-paying entity or individual.

Funds provided by taxation have been used by states and their functional equivalents throughout history to carry out many functions. Some of these include expenditures on war, the enforcement of law and public order, protection of property, economic infrastructure, public works, social engineering, and the operation of government itself. Most modern governments also use taxes to fund welfare and public services such as education systems, health care systems, pensions for the elderly, unemployment benefits, and public transportation, etc.

Governments use different kinds of taxes and vary the tax rates. This is done to distribute the tax burden among individuals or classes of the population involved in taxable activities, such as business, or to redistribute resources between individuals or classes in the population.

Kinds of taxes:

Income tax – it is a tax levied on the financial income of persons, corporations, or other legal entities. Personal income tax is often collected on a pay-as-you-earn basis, with small corrections made soon after the end of the tax year.

Property tax is a tax imposed on property by reason of its ownership. A property tax is usually levied on the value of property owned. A common type of property tax is an annual charge on the ownership of real estate, where the tax base is the estimated value of the property.

Value Added Tax / Goods and Services Tax. A value added tax (VAT) applies the equivalent of a sales tax to every operation that creates value.

Exercise 21. Choose all possible word combinations with the word “tax” from the text.

Exercise 22. Read the sentences from the text. Decide whether each sentence is true, false or not stated in the given text.

This sentence is