On this day ... 15 years ago – Plan to tax credit cards

At some point in the near future, taxes are going to have to be increased to improve the UK’s huge budget deficit. The main political parties are busy thinking up the most palatable solutions, looking for taxes which will increase revenue rather than ones which could inhibit growth. Here is a blast from the past which they should take heed of. Back in 1995 there was uproar as the treasury considered putting a tax on credit cards. The same tactic was actually used by the Carter administration in the US in 1979 causing consumer spending to grind to a halt. This article would be a fantastic starter to a lesson on the pros and cons of direct and indirect taxes. Click read more for some GCSE style questions and a group discussion to go with the article.

GCSE style questions
1. Is a tax of credit cards a direct or indirect tax? (1 mark)
2. Explain the possible disadvantage of taxing credit cards to increase government revenue (2 marks)
3. Governments should use direct taxes to increase revenue. Do you agree with this statement? Give reasons for your answer. (8 marks)

Group Discussion

As a group, think of five different taxes that the government could use to increase revenue. Discuss the possible pros and cons of each one.
- Present your finding to the rest of the class
- Produce a poster to aid your presentation
- Think of questions to ask other teams