1 Learning Intentions At the end of the unit I will be able to 1 Explain the difference between a Pigouvian tax and a Sin tax 2 Categorise taxes as either Pigouvian or Sin taxes 3 Distinguish between direct and indirect taxes ID: 1028891
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1. How Taxes are MadeUnit 21
2. Learning IntentionsAt the end of the unit, I will be able to:1Explain the difference between a Pigouvian tax and a Sin tax2Categorise taxes as either Pigouvian or Sin taxes3Distinguish between direct and indirect taxes4Describe how taxes are introduced into Irish law 5Identify the stakeholders that influence and shape Irish tax law2
3. Unit 1 - Retrieval PracticeActivity 1QuestionTrue / False1Taxes are collected in Ireland by the Revenue Commission2VAT is a tax on goods and services3Current income tax rates for employees are 21% and 40%4The principles of taxation are fairness, convenience, efficiency and certainty5DIRT is a tax on the interest paid on loans3
4. TaxesSin TaxesPigouvian Taxes4
5. Sin TaxThis is a tax levied on goods and services at the time of purchase The items purchased can be harmful or costly to society, e.g. petrol and diesel The aim of the tax is to discourage people from engaging in activities that are harmful to society, e.g. smoking cigarettesAlcoholTobaccoMineral OilsBetting5
6. Activity 2Activity 2BettingMineral OilsTobacco ProductsAlcoholHow do the following itemscause harm to society?6
7. Examples of Sin Taxes in IrelandSugar Sweetened Drinks TaxAlcohol Products TaxTobacco Products TaxMineral Oil TaxBetting DutyThese types of taxes are also known collectively as excise duties7
8. Sin TaxesThe money collected contributes to general government revenue and is spent on a wide range of goods and services provided by the governmentAlcohol TaxTobacco TaxBetting DutySugar SweetenedDrinks TaxMineral Oil TaxGovernment RevenueHealthEducationTransportAgricultureJusticeSocial Welfare8
9. Pigouvian TaxesThis is a tax imposed on individuals and businesses for engaging in activities that create a negative impact on societyThey are different from Sin Taxes, as the revenue (money) collected from these taxes is used specifically to fund initiatives to reduce the negative impact of the product or serviceCarbonTaxElectricityTaxClimateFundClimate ProtectionPlasticBag LevyEnvironmentFundWaste ReductionCampaigns9
10. Plastic Bag LevyThis is an example of a Pigouvian taxIt was introduced in 2002 and is a levy imposed on customers when they purchase a shopping bagThe retailer collects the levy on behalf of the Department of Communications, Climate Action and Environment and this money is paid into an Environment FundThe Environment Fund financesCampaigns to prevent / reduce wasteResearch into waste management10
11. Activity 3Identify the Sin/Pigouvian TaxesAlcohol Products TaxSin TaxBetting DutySin TaxPlastic Bag LevyPigouvian TaxMineral Oil TaxSin TaxCarbon TaxPigouvian Tax11
12. Activity 4Coffee Cup Facts in Ireland12
13. Activity 4Coffee Cup LevyAs part of the Circular Economy Bill, the government plans to introduce a levy of 20c on disposable coffee cups. The aim of this levy is to encourage people to use reusable cups and to reduce the amount of single-use cups that end up in landfill.Choose one of the following stakeholders and write a short paragraph from this person’s viewpoint about why they agree / disagree with the introduction of the levy.Café OwnerConsumerWaste Disposal CompanyEnvironmentalist13
14. Activity 5Irish Government RevisionWhat is Dáil Éireann?How are TDs elected to Dáil Éireann?What is Seanad Éireann?What is a Taoiseach?Who is the current Taoiseach?What is a Tánaiste?Who is the currentTánaiste?Who is the current President of Ireland?14
15. Irish Government Revision 2Irish Government RevisionThe PresidentHouses of the OireachtasDáil ÉireannSeanad Éireann15
16. Dáil ÉireannThe Dáil elects a Taoiseach (leader of the government)The Taoiseach:appoints a Tánaiste (Deputy Leader of the government)selects 7-15 Ministers from the Dáil The Taoiseach, Tánaiste and Ministers are known as the Cabinet16
17. The Irish CabinetDáil ÉireannConsists of 160 TDs elected by the publicElect a Taoiseach (Leader of the government)Appoints a Tánaiste(Deputy Leader of theGovernment)Selects 7-15 Ministers from the DáilMay be assisted byJunior Ministers17
18. Cabinet 2023Leo VaradkarTaoiseachMicheál MartinTáinaiste;Minister ofForeign Affairs; Minister ofDefenceMichael McGrathMinister of FinancePaschal DonohueMinister of PublicExpenditure, National Development Plan Delivery and andReformSimon CoveneyMinister of Enterprise, Trade and Employment 18
19. Dáil Éireann 2Dáil ÉireannThe Cabinet decides onGovernment policiesWhich new laws or changes to existing laws to introduce to the Oireachtas19
20. Seanad ÉireannThe Seanad consists of 60 members known as SenatorsThe main purpose of the Seanad is to debate legislation proposed by the governmentThe Seanad can amend a Bill that has been passed by the Dáil but cannot stop it becoming law20
21. How are taxes introduced in Ireland?If the government wants to introduce new taxes or amend existing taxes, this must be done through the law making process in IrelandThe government consults with a range of organisations and institutions before it makes any changes to the tax systemBased on meetings, submissions and reports from these stakeholders, the government can make decisions on how it will introduce or amend taxes21
22. Stakeholders that Influence Tax Laws in IrelandPre-election Manifestos and Policy Documents of Political PartiesDepartment of FinanceRevenue CommissionersTax Strategy GroupEuropean UnionSpecial Interest GroupsPublic ConsultationsThe Irish CourtsOECD(Organisation for Economic Co-operation and Development)Special Reports and Studies by Representative Groups, Statutory Agencies or Universities National Agreements22
23. How are laws introduced?Bills (draft of proposed laws) can be brought forward byGovernment Ministers, e.g. the Minister for FinanceOther TDsSenators (based in Seanad Éireann)Examples of current Bills can be found here23
24. Stages of a BillFirst StageThe Bill is initiated or presented to the House (Dáil Éireann / Seanad Éireann)Second StageThe general principles of the Bill are debatedThird Stage (Committee Stage)The Bill is examined in detail, section by section and amendments may be madeFourth Stage (Report Stage)Amendments from the Third Stage are consideredFinal StageFinal statements on the Bill are made24
25. Stages of a Bill 2Stages of a BillOnce a Bill has been passed in one House, e.g. Dáil Éireann, it is then sent to the other House, i.e. Seanad Éireann for second stage considerationIf the Bill is passed in both Houses, it is sent to the President to sign into lawBillDáil ÉireannSeanad ÉireannBill must be passed by both Housesbefore it is sent to the President for signingPresident of IrelandAct25
26. The Oireachtas legislative processPowToon Animation26
27. Stages of a Bill 3Activity 6Stages of a BillUsing the numbers 1-5, put the following stages of a Bill in the correct order.Final StageThe general principles of the Bill are debatedReport StageThe Bill is presentedCommittee Stage27
28. Budget DayEach year on Budget Day, the Minister for Finance and the Minister for Public Expenditure and Reform announce the government’s spending, tax and borrowing plans for the following yearIf the government wants to introduce new taxes or amend existing taxes, it must do so by introducing Bills that go through both Houses of the Oireachtas28
29. Activity 7Vacant Property Tax DebateBased on Local Property Tax (LPT) returns, the Revenue Commissioners has recorded approximately 57,000 vacant properties in Ireland. In Budget 2022, the Minister for Finance has announced plans to introduce a tax on certain types of vacant properties in Ireland.Prepare for a debate on the motion “All vacant properties in Ireland should be taxed”29
30. Activity 8Take a StandCitizens should have a greater say in creating and amending tax laws in IrelandSin taxes such as the Tobacco Products Tax have a positive impact in IrelandA Bill has to go through too many stages before it can become a lawTax laws are made to benefit the publicThe Plastic Bag Levy should be abolished30
31. Learning Journal31Complete your Learning Journal for Unit 2 – How Taxes are Made