Very Good Case study to develop ANALYTICAL & APPLICATION SKILL. Solve it!!!
Alcohol and Government Policy
In the UK, the National Health Service often has to deal with the consequences of drinking alcohol. It is said that there is less trouble in other countries which have more relaxed licensing laws. In the UK, accidents caused by drinking alcohol result in 150 000 hospital admissions every year. Time taken dealing with these admissions prevents other treatment. There are about 22 000 deaths linked to alcohol-related illnesses every year.

There are also other consequences. Very many working days are lost each year because of
alcohol abuse which, it is estimated, cost the employers £6.4 million in lost production. There is also the cost of policing the city centres particularly at night and at weekends when excessive drinking causes riotous behaviour. It is argued that while police are controlling this behaviour it leaves property more vulnerable to burglary. Property owners, as a result, may have to pay extra insurance premiums and protect their property by paying for burglar alarms to be fitted. Then there are legal costs. If people are prosecuted for drink-related offences it involves court costs, lawyers’ costs and costs for the witnesses to attend court. There are also the costs of establishing centres that treat people who drink excessively and the costs of social workers who care for those who are victims of drink-related incidents.

One of the difficulties of trying to calculate the cost of alcohol use is how to estimate figures such as those above. How do we measure the cost of police time? How do we measure the costs of an emotional upset when someone is injured by a drink-related driving accident? How do we measure the effect of violence in the home caused by excessive drinking?

Yet there are benefits from alcohol. People gain pleasure from drinking: it is a social activity. Some alcohol is said to give health benefits. The government places a tax on alcohol and gains a large amount of revenue as a result. Many people are employed in the manufacture and distribution of drinks. Others are employed in clubs and bars that serve alcohol.

(a) (i) Define opportunity cost. [2]
(ii) Identify and explain one example of opportunity cost from the above extract. [2]
(b) You are asked to investigate the economic arguments for and against a ban on the sale and
consumption of alcohol. Discuss how helpful you would find the above extract and what
further information you would seek. [10]
(c) The government decides not to introduce a ban on alcohol. Instead it considers either raising
the existing indirect tax on alcohol or banning the advertising of alcohol. Discuss which of
these two approaches you would favour. [9]
[Total : 23]

Dear Students,
Following questions will help you to understand different types of tax that Indian pays. Can You relate each of them whether it is PROGRESSIVE, REGRESSIVE OR PROPORTIONAL?

1) Qus.: What are you doing?

Ans.: Business.

Tax : PAY PROFESSIONAL TAX



2) Qus.: What are you doing in Business?

Ans.: Selling the Goods.

Tax : PAY SALES TAX



3) Qus.: From where are you getting Goods?

Ans.: From other State/Abroad

Tax : PAY CENTRAL SALES TAX, CUSTOM DUTY & OCTROI



4) Qus.: What are you getting in Selling Goods?

Ans.: Profit.

Tax : PAY INCOME TAX



5) Qus.: How do you distribute profit ?

Ans : By way of dividend

Tax : PAY DIVIDEND DISTRIBUTION TAX



6) Qus.: Where you Manufacturing the Goods?

Ans.: Factory.

Tax : PAY EXCISE DUTY



8) Qus.: Do you have Staff?

Ans.: Yes

Tax: PAY STAFF PROFESSIONAL TAX



9) Qus.: Doing business in Millions?

Ans.: Yes

Tax : PAY TURNOVER TAX ?

Ans : No

Tax : Then pay Minimum Alternate Tax



10) Qus.: Are you taking out over 25,000 Cash from Bank?

Ans.: Yes, for Salary.

Tax : PAY CASH HANDLING TAX



11) Qus.: Where are you taking your client for Lunch & Dinner?

Ans.: Hotel

Tax : PAY FOOD & ENTERTAINMENT TAX



12) Qus.: Are you going Out of Station for Business?

Ans.: Yes

Tax : PAY FRINGE BENEFIT TAX



13) Qus.: Have you taken or given any Service/s?

Ans.: Yes

Tax : PAY SERVICE TAX



14) Qus.: How come you got such a Big Amount?

Ans.: Gift on birthday.

Tax : PAY GIFT TAX



15) Qus.: Do you have any Wealth?

Ans.: Yes

Tax : PAY WEALTH TAX



16) Qus.: To reduce Tension, for entertainment, where are you going?

Ans.: Cinema or Resort.

Tax : PAY ENTERTAINMENT TAX



17) Qus.: Have you purchased House?

Ans.: Yes

Tax : PAY STAMP DUTY & REGISTRATION FEE



18) Qus.: How you Travel?

Ans.: Bus

Tax : PAY SURCHARGE



19) Qus.: Any Additional Tax?

Ans.: Yes

Tax : PAY EDUCATIONAL, ADDITIONAL EDUCATIONAL &

SURCHARGE ON ALL THE CENTRAL GOVT.'s TAX !!!



20) Qus.: Delayed any time Paying Any Tax?

Ans.: Yes

Tax : PAY INTEREST & PENALTY

Highlights of Union Budget 2010-2011

Highlights of Union Budget 2010-2011

Finance minister Pranab Mukherjee began presenting the Union budget for 2010-11 in the Lok Sabha today after the Cabinet approved the document. Here are some of the highlights of his budget speech.

• The Indian economy was facing grave uncertainty. Growth had started decelerating when the interim and full budget for 2009-10 was presented.
• At home there was added uncertainty because of subnormal southwest monsoon.
• Yet, the economy now in a far better position than it was
  eight years ago.
• India weathered the economic crisis well and emerged from the global slowdown faster than any other country.
• First challenge before the government is to quickly revert to
  high GDP growth path of 9%.
• Expects 10% economic growth in the near future.
• Second challenge is to harness economic growth to make it more inclusive and consolidate gains.
• Third challenge is to overcome weakness in government's public delivery mechanism; a long way to go in this.
• Impressive recovery in the past few months. Can witness
  faster recovery in the coming months.
• Food security has been strengthened.
• But bottleneck of the public delivery mechanism can hold us back.
• Fiscal year 2009-10 was challenging for the economy.
• Focus shifted to non-governmental actors and an enabling government. Government now concentrates on supporting and delivering services to the poorer sections.
• Economy stabilised in the first quarter of 2009 itself.
• 18.5% manufacturing growth in December was the highest in two decades.
• Figures for merchandise exports for January encouraging
  after turnaround in November and December last year.
• Double digit food inflation last year due to bad monsoon
  and drought-like conditions.
• Government conscious of the price rise and taking steps to tackle it.
• Erratic monsoon and drought-like conditions forced supply-side bottleneck that fuelled inflation.
• Need to review stimulus imparted to economy last year to overcome the recession.
• Need to ensure that the demand-supply imbalance is managed.
• Need to make growth more broad-based.
• Need to review public spending and mobilise resources.
• Status paper on public debt within six months.
• Government hopes to implement direct tax code from April 2011.
• Earnest endeavour to implement general sales tax in April 2011.
• Government will raise Rs25,000 crore from divestment of its stake in state-owned firms.
• Kirit Parekh report on fuel price deregulation will be taken up by petroleum minister Murli Deora in due course.
• Nutrient-based fertiliser subsidy scheme to come into force from April 1 this year.
• Nutrient-based fertiliser subsidy will reduce volatility of subsidy and also reduce it.
• Market capitalisation of five public-sector undertakings listed since October increased by 3.5 times.
• FDI inflows steady during the year. Government has taken
  series of steps to simplify FDI regime. Intends to make FDI policy user friendly by compling all guidelines into one document.
• Government has decided to set up apex-level Financial
  Stability and Development Council.
• RBI considering issuing banking licences to private companies. Non-banking finance companies will also be considered if they meet the criteria.
• Government to provide Rs16,500 crore to public-sector
  banks to maintain tier-I capital.
• Government to continue interest subvention of 2% for one more year for exports covering handicrafts, carpets,
  handlooms and small and medium enterprises.
• Government to provide Rs300 crore to organise 60,000 pulse and oilseed villages and provide integrated intervention of watershed and related programmes.
• Rs200 crore provided for climate-resilient agriculture
  initiative.
• Government committed to ensuring continued growth of
  special economic zones.
• Need to take firm view on opening up of the retail sector.
• Deficit in foodgrains storage capacity to be met with private-sector participation.
• Period for repayment of loans by farmers extended by six months to June 30, 2010, in view of the drought and floods in some parts of the country.
• Interest subvention for timely repayment of crop loans raised from 1% to 2%, bringing the effective rate of interest to 5%.
• Road transport allocation raised by 13% to Rs19,894 crore.
• Proposal to maintain thrust of upgrading infrastructure in rural and urban areas. IIFCL authorised to refinance infrastructure projects.
• Rs1,73,552 crore provided for infrastructure development.
• Allocation for railways fixed at Rs16,752 crore, an increase of Rs950 crore over the last financial year.
• Government proposes to set up Coal Development Regulatory Authority.
• Mega power plant policy modified to lower cost of generation; allocation to power sector more than doubled to Rs5,130 crore in 2010-11.
• Government favours competitive bidding for coal blocks for captive power plants.
• Rs500 crore allocated for solar and hydro projects for the Ladakh region in Jammu & Kashmir.
• Clean Energy Fund to be created for research in new energy sources.
• Allocation for new and renewable energy ministry increased by 61% to Rs1,000 crore.
• One-time grant of Rs200 crore provided to Tirupur textile cluster in Tamil Nadu.
• Allocation for National Ganga River Basin Authority doubled to Rs500 crore.
• Alternative port to be developed at Sagar Island in West Bengal.
• Draft of Food Security Bill ready, to be placed in the public domain soon.
• Outlay for social sectors pegged at Rs1,37,674 crore, accounting for 37% of the total plan allocation.
• Plan allocation for school education raised from Rs26,800 crore to Rs31,036 crore in 2010-11.
• 25% of plan outlay earmarked for rural infrastructure development.
• Plan allocation for health and family welfare increased to Rs22,300 crore from Rs19,534 crore.
• For rural development, Rs66,100 crore have been allocated.
• Allocation for National Rural Employment Guarantee Authority stepped up to Rs40,100 crore in 2010-11.
• Indira Awas Yojana's unit cost raised to Rs45,000 in the plains and Rs48,500 in hilly areas.
• Allocation for urban development increased by 75% to Rs5,400 crore in 2010-11.
• 1% interest subvention loan for houses costing up to Rs20 lakh extended to March 31, 2011; Rs700 crore provided.
• Allocation for development of micro and small-scale sector raised from Rs1,794 crore to Rs2,400 crore.
• Rs1,270 crore provided for slum development programme, marking an increase of 700%.
• Government to set up National Social Security Fund with initial allocation of Rs1,000 crore to provide social security to workers in the unorganised sector.
• Government to contribute Rs1,000 per annum to each
  account holder under the new pension scheme.
• Exclusive skill development programme to be launched for textile and garment-sector employees.
• Allocation for woman and child development increased by 80%
• Plan outlay for the social justice ministry raised by 80% to Rs4,500 crore.
• Plan allocation for minority affairs ministry raised from Rs1,740 crore to Rs2,600 crore.
• Financial-Sector Legislative Reforms Committee to be set
  up.
• Rs1,900 crore allocated for Unique Identification Authority of India.
• A unique identity symbol will be provided to the rupee in line with the US dollar, British pound sterling, euro and Japanese yen.
• Defence allocation pegged at Rs1,47,344 crore in 2010-11
  against Rs1,41,703 crore in the previous year. Of this, capital expenditure would account for Rs60,000 crore.
• Planning Commission to prepare integrated action plan for
  Naxal-affected areas to encourage "misguided elements" to eschew violence and join the mainstream.
• Gross tax receipts pegged at Rs7,46,656 crore for 2010-11, non-tax revenues at Rs1,48,118 crore.
• Total expenditure pegged at Rs11.8 lakh crore, an increase of 8.6%.
• Fiscal deficit at 5.5%.
• Fiscal deficit seen at 4.8% and 4.1% in 2011-12 and 2012-13, respectively.
• Non-plan expenditure pegged at Rs37,392 crore and plan expenditure at Rs7,35,657 crore in budget estimates. Proposed increase of 15% in plan expenditure and 6% in non-plan expenditure.
• Cash subsidy for fuel and fertiliser instead of previous practice of bonds to continue.
• Fiscal deficit pegged at 6.9% in 2009-10 as against 7.8% in the previous fiscal.
• Government's net borrowing to be Rs3,45,010 crore for 2010-11.
• Income-tax department ready with two-page Saral-2 returns
  form for individual salaried assesses.
• Personal income-ax rates pruned:
  Income up to Rs1.6 lakh — nil
  Income above Rs1.6 lakh and up to Rs5 lakh — 10%
  Income above Rs5 lakh and up to Rs8 lakh — 20%
  Income above Rs8 lakh — 30%
• Additional deduction of Rs20,000 allowed on long-term
  Infrastructure bonds for income-tax payers; this is above Rs1 lakh on savings instruments allowed already.
• Investment-linked tax deductions to be allowed to two-star hotels anywhere in the country.
• Weighted deduction of 125% for payments to approved associations doing social and statistical research.
• One-time interim relief to housing and real-estate sector.
• Businesses with a turnover of up to Rs60 lakh and professionals earning up to Rs15 lakh to be exempted from the obligation to audit their accounts.
• Housing projects allowed to be completed in five years instead of four to avail of tax breaks.
• Revenue loss of Rs26,000 crore on direct tax proposals.
• Central excise duty on all non-petroleum products raised to 10% from 8%.
• FM increases customs duty on crude oil to 5%, on diesel and petrol to 7.5%, and on other petroleum products to 10%.
• Structural changes in excise duties on cigarettes, cigars, and cigarillos.
• Clean energy cess of Rs50 per ton to be levied on coal produced in India.
• Concessional excise duty of 4% on solar cycle-rickshaws.
• Balloons exempted from central excise duty.
• Customs and central excise proposals to result in a net revenue gain of Rs43,500 crore.
• More services to be brought under the service tax net.
• Certain accredited news agencies exempted from payment of service tax.
• Net revenue gain from tax proposals pegged at Rs20,500 crore.

Dear students of IX-B & IX-E,

Solve the following questions as home work
Grade IX-B will email the answer (soft copy only) by 8th March 2011 &
Grade IX-E will email the answer (soft copy only) by 9th March 2011 to the following email id:

icharjee@indiatimes.com

Q. Three government policy aims are the redistribution of income, economic growth and price
stability.
(a) Explain what these aims mean. [6]
(b) What might a government do to try to redistribute income? [6]
(c) How might a government affect economic growth in a country? [8]

Hi, This is Indrajeet Sir.

This is something new for u all IGCSE students.

Keep in touch