... is several reasons why the government imposes tax. To raise money to pay for public expenditure, most public spending is paid for taxes. The rest is paid for by royalties on north sea oil, national insurance contributions; other sources, such as profits from nationalised industries or rents from council houses; and government borrowing. To affect on economic behaviour. For instance, taxes on cigarettes discourage smoking. Taxes on petrol encourage motorist to economise on fuel. To help redistribute income between different individuals and between different sectors of the economy. To help control the economy. WHAT ARE THE MAIN TYPES OF TAXES LEVIED IN THE U.K. INDIRCT TAXES: CUSTOM AND EXCISE TAX VALUE ADDED TAX (VAT) This is a tax on expenditure. There are different rates of tax. Essential commodities-food, water, children clothing, books, newspapers a1nd public transport-are tax exempt (i.e. there is a zero rat). Domestic fuel (gas, electricity, heating oil and coal) is taxed at 8%. All other ...

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