Now listen and tick which transactions in the list are mentioned.

1 buying a new house

2 fixing up an old home

3 buying books

4 paying for a course at a local college

5 joining a gym

6 going on holiday

 

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Before you read_

Discuss these questions with your partner.

What do you think your government spends money on?

Where do you imagine most of the government's money goes?

Would you say the government spends wisely?

 

D Vocabulary

Complete each sentence with a word or phrase from the box.

■ benefits	■ charge	■ discourage
■ essential	■ financial	■ harmful
■ income gap	■ luxuries	■ source
■ taxation

 

1 If you give someone......................help, you give

them money.

2......................are money that the government

gives to people who need help.

3 If you......................someone from doing

something, you persuade them not to do it.

4......................things are not good for your health.

5 The difference between the highest salaries and the lowest is called the.......................

6 Companies......................customers for

their services.

7 For most people, the......................of their income

is paid work.

8 Governments get most of their money through

9 Water is......................to life, but it costs

very little.

10......................are expensive things that we don't

really need.

 

Reading 2

Government revenue and spending

In the UК, the government spends about £ 500 billion a year. Where does such a huge amount of money come from? Perhaps more importantly, what does the government spend it on? The money governments have to spend is called revenue. Revenue conies from several sources, including charging for services and borrowing. However, a government's main source of revenue is taxation. There are different kinds of taxes. For example, anyone with a regular income has to pay income tax on their earnings. This is a percentage of their income which goes to the government. Many countries operate a system called progressive income tax. Und er this system, people with a higher income pay a higher percentage to the government. Another kind of tax is value added tax. This is paid when we buy goods or services which are not essential or arc regarded as luxuries.

 

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Taxation, however, is not only a way for a government to earn revenue. Through taxation, governments also achieve a number of other things. Income tax. for example, should help to make the income gap between the rich and the poorsmaller. Tax on harmful products like tobacco and alcohol should discourage people from consuming them. Finally, taxation is a way for the government to control overall supply and demand in the market. For instance, a very high tax on a product will mean few people can buy it and therefore its market will be very small.

So where does the money go? Revenue is generally spent on a combination of public services and somethint called transfer payments. Transfer payments arc benefits that are given to families and individuals in society who need financial support. In Britain, transfer payments make up almost a third of all public spending. These payments include safety net benefits such as unemployment benefit and social security benefits for families who do not have enough income to get by.

Most of the rest of the revenue goes on public goods. These can be divided into two areas: pure public goods and mixed public goods. Pure public goods are things like street lighting or national defence. These are important for everyone in a society, but they cannot be supplied by private business To understand why not. let's look at the example of street lighting. Lighting needs to be offered to everyone who uses the streets If a private business provided street lighting, they would need to charge for it. But how could they

make everyone pay? Non-payers would benefit from the lighting, too. It would be Impossible to stop them. This is why a government, and not private businesses, offers street lighting; everyone

pays for it through their taxes

Mixed public goods arc things which people ought to have because they are beneficial, such as health care and education. Why do many governments fund these things? The reason is that having a healthy, educated population is good for the economy and for society as a whole. People, especially those on low incomes, may not he able to spend money on these services. Governments fund the services so that everyone can afford

them, and this eneourages people to use them.

 

E Comprehension

Now read the text again and match each paragraph with the correct heading.

PARAGRAPH 1......................

PARAGRAPH 2......................

PARAGRAPH 3......................

PARAGRAPH 4......................

PARAGRAPH 5......................

The aims of taxation

Services that businesses won't provide С Providing what's good for us

Providing social support

Collecting income

Before you listen

Discuss the following with your partner.

The pie chart below shows how the UK government spends its revenue. Each segment of the pie (A to H) shows a different area of spending. The key shows what these areas are. Some labels are missing. Which of these areas do you think they are?

Defence

Education

Environment

Health care

Transport

F Listening )))

Now listen and complete the chart.

 

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G Speaking

 

Discuss these questions with your partner.

In your opinion, what is more important for an economic system - equity or efficiency?

Do you think the tax system in your country is fair? Why / Why not?

 

Task

Work in groups of four. Each of you has one of the following roles.

Finance Minister - you decide on how government revenue should be spent.

Education Minister - you want more spending on education.

Talk about:

overcrowded classrooms lack of facilities teacher training

Environment Minister - you want more spending on roads and public transport.

Talk about:

dangerous roads improving country roads increased underground train system free transport for retired people

Health Minister - you want more spending on

hospitals and health care.

Talk about:

cheaper medicine

waiting lists in hospitals

length of time to get a doctor's appointment hospital facilities

Ministers: persuade the Finance Minister to give you more money. Finance Minister: ask questions to decide who needs more money.

Pronunciation guide

Issue

Consumption

Equity

Externality

Beneficial

Percentage

Revenue

 

H Writing

Write the following composition: What is welfare economics and why is it important?

First read through the texts again and make notes, then use the outline plan to organise your composition.

Composition

PARAGRAPH 1

Explain what welfare economics studies.

Points to include:

economics is not just numbers, economics with a heart, government policies affect society

Useful words and phrases: everyday lives, equity, externalities

PARAGRAPH 2

Say how economic relationships affect the welfare of a society.

Mention these relationships:

Buyers and sellers - how do prices affect people's lives?

Workers and employees - how does work affect people's lives?

Factories and the environment - what is the affect of the economy on our environment?

Useful words and phrases: cost of living, wages, working conditions, damage, pollution

PARAGRAPH 3

Explain how taxation can create equity in the economy.

Points to include:

What is equity?

How can taxation help to create equity? How can a tax system have vertical and horizontal equity?

Useful words and phrases: fairness, unfairness, income, distribute, wealth

PARAGRAPH 4

Sum up by saying why you think welfare economics is important.

Points to include:

Importance of understanding how economics effects our lives.

Can economic policies make our lives better?

Useful words and phrases: to sum up. in my

view, helps us appreciate, impact, improve

Write 200-250 words

 

 

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Before you read

Discuss these questions with your partner.

What do you think it means to be wealthy? Why are some people wealthier than others?

 

A Vocabulary

Match the words and phrases with the definitions.

1 valuable

2 invest

3 pension scheme

4 static

5 belongings

6 flow

7 distribution

8 interest

9 Savings

10 inequality

11 extent

12 stocks and shares

13 store

 

A to lend money to a company or bank in order to earn more money

B how large or important something is

C the way in which a supply of something, like money, is shared among people

D money put somewhere for later use. for example in the bank

E immobile, not moving

F unfairness

Ga way of saving money for when you got old and stop working

H things someone owns, but usually things that car, be moved

I if you save money in a bank, you get this extra money for keeping it there

J movement like a river

K important or worth money

La collection or supply of things kept for later use

M part of the value of a company - people buy and sell these

 

 

Reading 1