why should I care
I want to know
who pays for parks
An introduction to tax
for Europe's youngest citizens
9 to 12 years old
He is 11 years-old and would like to know who pays for parks, playgrounds, teachers, hospitals - and more! My mum told me that the park belongs to everyone because it's paid for with tax money. What does she mean?
Tax, what is it?
Tax is the money gathered by the government and then redistributed to people living in the same city or country, or to build roads, schools, parks and places that we couldn’t do without. The amount gathered depends on how much money people have.
Tax is money paid by:
- people who work or receive money from elsewhere: this is called ‘income tax’;
- people who own a property: this is called ‘property tax’;
- businesses: this is called ‘corporate tax’;
- activities that have an impact on the environment: this is called ‘environmental tax’;
- the money or belongings that are left to you after someone dies: this is called ‘inheritance tax’;
- people who buy products or services: this is called ‘Value Added Tax’ (VAT).
How do taxes impact my life?
Without tax, there would be much less money to pay for these things.
Click on the activities above to see how taxes contributed.
Think about all those beautiful paintings or dinosaur models. How do you think the museum pays for these? If there is an entrance fee, that helps. But it’s not enough! The rest is usually paid for through taxes.
When you go to school, you use material provided by teachers and play in playgrounds built by the school. Both are only possible because of tax.
Public transport like buses, trams, the underground and trains are also paid for with money from tax.
The people who build bike lanes are paid for with money collected as tax – and so are the tarmac and paint used to make them!
How hospitals are paid for is different in every country. But from building them to paying doctors and nurses and buying expensive equipment for research and treatment to save lives – money collected from tax is nearly always used.
Who pays taxes?
In general, tax is paid by people who can contribute.
For example, people who work give some of what they earn to the government.
Do I pay tax?
Have you bought any games, sweets or magazines recently? You paid tax!
‘Value Added Tax’ is added to the price of most products and services. You see the amount of tax on the receipt you receive when you pay.
What happens if I don’t pay tax?
Some people try to escape paying the tax they owe. This is called ‘fraud’ and/or ‘evasion’.
Imagine if everyone in your class was asked to give one of their favourite games to the school, for all the children to play with. If you gave one of your games, but others in your class didn’t, what would you think?
When everyone pays tax, everyone benefits.
Would you want a life without tax?
No tax would mean less security and culture, fewer roads, hospitals, schools, museums, public libraries and buses, and less clean water, etc.
When people or businesses deliberately try to hide their money to escape paying tax, it is called ‘tax fraud’.
When people cheat to pay less, this is called ‘tax evasion’.
The role of the European Union
The EU has 27 member countries. Each has a different history, geography and culture – and each has its own tax arrangements.
Even though it is your country that collects tax and tackles tax fraud and tax evasion, the EU helps by making it easier for countries to cooperate and exchange information.
Oliver would like to buy new shoes... he particularly likes the brand ‘Pike’.
Help Oliver make the right decision on where to buy his shoes.
He goes to the ‘Pike’ shop, the shoes he would like to buy cost €55!
His friend, Zora, tells him that she knows a market stall where he can buy shoes that look almost identical for €25!
-Buy the shoes at the ‘Pike’ shop?
-Listen to his friend and buy the shoes on the market stall Zora told him about?
-If he buys the shoes from an unknown market stall, Oliver is not sure he will have real ‘Pike’ shoes, as the price is extremely low. It is too good to be true! And he can’t be sure whether they will keep his feet warm and dry like ‘real’ Pike shoes.
-If he buys the shoes at the ‘Pike’ shop, Oliver will definitely have the shoes he has been dreaming about, and he knows that they will last a long time and keep his feet warm and dry.
Some people create their own shoes and then add the label of Oliver’s favourite. They do so without permission from the ‘Pike’ company...This is called counterfeiting.
These companies using ‘fake branding’ usually don’t pay tax. And Oliver should also know that these fake products can sometimes fall apart when you try to use them – or even be dangerous.
I want to know more about tax!Ask your parents which taxes they pay and what they think about them. Identify activities or places paid for thanks to tax.
Which organisation collects tax money in your country?
Search on the Internet to find out. Look for some unusual past and present taxes from different countries!