Where do our taxes go?
A tax is a compulsory payment collected by law and helps finance public activities and services.
There are taxes on income, purchases, property and gains. There are also insurance fees and payments to the local authority. These are different mechanisms: there is no single percentage that applies to every purchase or every person. To understand a budget ask who pays, on which amount, to whom, when, and whether there is an exemption or relief. Taxes help fund, among other things, education, health, infrastructure and security; you can also discuss efficiency, fairness and how the budget is allocated.
If you received 100 ₪ as a gift and bought a product, do not assume every type of tax in the world applies to that 100 ₪. Each charge is assessed according to its own rules.
What should you check before calculating a tax?
Tax Authority · Income Tax ↗Check your understanding
What should you check before calculating a tax?
- What the tax base is and who is liable for it
- Always add all tax rates together
- Only the color of the banknote
Answer and explanation
What the tax base is and who is liable for it. Different taxes apply to different bases and situations.
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VAT: the price before and after — Value added tax is a tax on transactions that are liable for it. In the consumer price it is usually already included.
Gross, net and tax brackets — Gross is the amount before deductions; net is the amount that remains after the relevant deductions.
National insurance and health insurance contributions — These are compulsory payments governed by rules separate from income tax, related to the social security and health systems.