(b) Explain direct taxes; indirect taxes; Public Sector Net Cash Requirement (PSNCR);GDP.
Indirect Taxes:often referred to as “hidden” or “stealth” taxes, these are embedded in the cost of items bough by individuals or companies. Value-Added Tax (VAT) and exercise duties on tobacco and alcohol are examples of indirect taxes. Because they are charged at a flat rate on relevant items, they are seen as regressive – i.e. they do not take account of an individual or company’s ability to pay.
Public sector net cash requirement (PSNCR): formerly the “public sector borrowing requirement” (PSBR), this is the sum of money that the British government will need to borrow through commercial loans or from the public in a given financial year to meet its public spending commitments – that is, it is the difference between the total taxation that the Exchequer expects to raise in a year and its actual outgoings.
Direct Taxes: an umbrella term for taxes, such as Income Tax and Corporation Tax, that are taken directly from the individual or company on whom they are levied, normally at a progressive rate determined by their income levels in a given financial year.
Gross Domestic Product(GDP): the total profit from all goods and services generated in Britain in a given financial year, irrespective of which state benefits from team.
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