GMGT 1010 Lecture Notes - Lecture 36: Fiscal Policy, Sin Tax, Tax Credit

• School: University of Manitoba
• Department: General Management
• Course: GMGT 1010
• Professor: Brock V.Cordes

Document Summary

Also been used as a method of encouraging or discouraging taxpayers. Sin tax: the additional cost of the product from increased taxes discourages additional consumption (ex: cigarettes and alcohol) Tax credit: encourage businesses to hire new employees or to purchase new equipment (an amount that can be deducted from a tax bill) Taxes are levied from a variety of sources. Income (personal and business), sales, and property are the major bases of tax revenue: largest share comes from personal income. Fiscal policy: the deferral government s effort to keep the economy stable by increasing or decreasing taxes or government spending. The first half of fiscal policy involves taxation. High tax rates tend to slow the economy because they draw money away from the private sector and are remitted to the government. High tax rates may also discourage small business ownership because they decrease the profits businesses can make and this can make the effort less rewarding.