Find out from your parents if they pay taxes. If yes, why do they do so and how?
Yes, my parents pay taxes. They do so because taxation is an important source of government revenue. The government needs this revenue to meet its growing public expenditure in areas such as the social sector and defence, which do not provide immediate returns but are essential for the nation.
They pay taxes in the form of direct taxes, which include taxes on incomes of individuals as well as profits of business enterprises. My parents file their income tax returns and pay taxes on their earnings. Since 1991, there has been a continuous reduction in taxes on individual incomes, and moderate rates of income tax encourage savings and voluntary disclosure of income.
Explanation
This is a 'Work These Out' activity-based question. The answer draws from the context about types of taxes (direct taxes on incomes and profits), the purpose of taxation (government revenue for public expenditure in social sector and defence), and the tax reforms since 1991 that have reduced income tax rates to encourage voluntary compliance. The student is expected to connect textbook knowledge with real-world observation.