Applied Economics

TAX from the Latin word “taxo” is a mandatory financial charge or some other type of levy
imposed upon a taxpayer (an individual or other legal entity) by a governmental organization
in order to fund various public expenditures. A failure to pay, along with evasion of or
resistance to taxation, is punishable by law.

Importance of Taxes in Society

Without taxes, governments would be unable to meet the demands of their societies. Taxes
are crucial because governments collect this money and use it to finance social projects.
Some of these projects include:
• Health
Without taxes, government contributions to the health sector would be impossible. Taxes go
to funding health services such as social healthcare, medical research, social security, etc.
• Education
Education could be one of the most deserving recipients of tax money. Governments put a lot
of importance in development of human capital and education is central in this development.
Money from taxes is channeled to funding, furnishing, and maintaining the public education
system.
• Governance
Governance is a crucial component in the smooth running of country affairs. Poor governance
would have far reaching ramifications on the entire country with a heavy toll on its economic
growth. Good governance ensures that the money collected is utilized in a manner that
benefits citizens of the country. This money also goes to pay public servants, police officers,
members of parliaments, the postal system, and others. Indeed, with a proper and functioning
form of government, there will be no effective protection of public interest.
Other important sectors are infrastructure development, transport, housing, etc.

TARRIFS is a tax imposed by a government on goods and services imported from other
countries that serves to increase the price and make imports less desirable, or at least less
competitive, versus domestic goods and services. ... The government's hope is that the added
cost will make imported goods much less desirable.
The benefits of tariffs are uneven. Because a tariff is a tax, the government will see increased
revenue as imports enter the domestic market. Domestic industries also benefit from a
reduction in competition, since import prices are artificially inflated.

WHAT IS FISCAL POLICY?

FISCAL POLICY is the means by which a government adjusts its spending levels and tax
rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy
through which a central bank influences a nation's money supply. These two policies are used
in various combinations to direct a country's economic goals. Here's a look at how fiscal
policy works, how it must be monitored, and how its implementation may affect different
people in an economy.

WHAT IS TRADE POLICY AND GLOBALIZATION?

trade policy
Trade policy defines standards, goals, rules and regulations that pertain to trade relations
between countries. These policies are specific to each country and are formulated by its
public officials. Their aim is to boost the nation’s international trade. A country’s trade policy
includes taxes imposed on import and export, inspection regulations, and tariffs and quotas.

Globalization
is the spread of products, technology, information, and jobs across national borders and
cultures. In economic terms, it describes an interdependence of nations around the globe
fostered through free trade.
On the upside, it can raise the standard of living in poor and less developed countries by
providing job opportunity, modernization, and improved access to goods and services. On the
downside, it can destroy job opportunities in more developed and high-wage countries as the
production of goods moves across borders.

WHAT IS WORLD TRADE ORAGANIZATION?

The World Trade Organization (WTO) is the only global international organization dealing
with the rules of trade between nations. At its heart are the WTO agreements, negotiated and
signed by the bulk of the world's trading nations and ratified in their parliaments.
WHAT IS GATT AND ASEAN AND THEIR IMPORTANCE?

GATT
The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many
countries, whose overall purpose was to promote international trade by reducing or
eliminating trade barriers such as tariffs or quotas. ... Experts attribute part of these tariff
changes to GATT and the WTO.
It was formed in 1948 after World War II, was intended to boost economic recovery after the
war. The main objective of GATT was to expand international trade by eliminating or
reducing quotas, tariffs, and subsidies while preserving significant regulations.

ASEAN
The Association of Southeast Asian Nation (ASEAN) is a regional intergovernmental
organization comprising ten countries in Southeast Asia, which promotes intergovernmental
cooperation and facilitates economic, political, security, military, educational, and
sociocultural integration among its members and other countries in Asia. It also regularly
engages other countries in the Asia-Pacific region and beyond. A major partner of Shanghai
Cooperation Organization, ASEAN maintains a global network of alliances and dialogue
partners and is considered by many as a global powerhouse,[)the central union for
cooperation in Asia-Pacific, and a prominent and influential organization. It is involved in
numerous international affairs, and hosts diplomatic missions throughout the world.

The ASEAN Declaration states that the aims and purposes of the Association are: (1) to
accelerate the economic growth, social progress and cultural development in the region
through joint endeavors in the spirit of equality and partnership in order to strengthen the
foundation for a prosperous and peaceful community of Southeast Asian nations, and (2) to
promote regional peace and stability through abiding respect for justice and the rule of law in
the relationship among countries in the region and adherence to the principles of the United
Nations Charter. In 1995, the ASEAN Heads of State and Government re-affirmed that
“Cooperative peace and shared prosperity shall be the fundamental goals of ASEAN.”
Submitted by: Ruel A. Longgakit
Submiyted to: Robert Kim Cabeza