კონფერენცია

∘ Dali Magrakvelidze ∘
TAXES - AN IMPORTANT FACTOR IN CHANGING THE SOCIAL CONDITION

Summary

To understand the essence of a tax one needs to keep in mind that when there is a tax there are two parts in price, one that costumer pays (P_D) – called the price of demand, and other one received by a supplier (P_S) – called the price of supply. The price of demand and the price of supply are different in amount of tax.

In this work I study the variations of prices when amount taxes or cost taxes are imposed. In addition, we investigate if the economic conditions are worsening or improving while increasing or decreasing taxes.

The taxation of goods usually leads to the increase of price paid by the consumers and to the reduction of price received by supplier. This is an obvious expenditure for the consumers, but from the point of view of an economist the actual cost of the payments is the quantitative reduction of goods.

The government receives profit from taxes, and the consumers who use the government's support connected to this profit, are also in profit. We cannot claim for sure how many the consumers are profiting, till we figure out how much money is spent received from the taxation.

Suppose the profit obtained from the tax goes back to the customer and the entrepreneur, or is used for service provision.

Then the net profit of the government is A + C - total profit earned from tax. Because the losses of consumers and entrepreneurs' advantages are net expenditures and profit earned from taxes is a net profit for the government, the net profits of the tax will be the same as the algebraic sum of these elements: - (A + B) Consumption advantage of consumers - (C + D) loss of entrepreneurs and + ( A + C) profit of Government.

Ivane Javakhishvili Tbilisi State University Paata Gugushvili Institute of Economics International Scientific C O N F E R E N C E S "ECONOMY – XXI CENTURY"

E ISSN 2587 - 4691	∘ Dali Magrakvelidze ∘ TAXES - AN IMPORTANT FACTOR IN CHANGING THE SOCIAL CONDITION Summary To understand the essence of a tax one needs to keep in mind that when there is a tax there are two parts in price, one that costumer pays (P_D) – called the price of demand, and other one received by a supplier (P_S) – called the price of supply. The price of demand and the price of supply are different in amount of tax. In this work I study the variations of prices when amount taxes or cost taxes are imposed. In addition, we investigate if the economic conditions are worsening or improving while increasing or decreasing taxes. The taxation of goods usually leads to the increase of price paid by the consumers and to the reduction of price received by supplier. This is an obvious expenditure for the consumers, but from the point of view of an economist the actual cost of the payments is the quantitative reduction of goods. The government receives profit from taxes, and the consumers who use the government's support connected to this profit, are also in profit. We cannot claim for sure how many the consumers are profiting, till we figure out how much money is spent received from the taxation. Suppose the profit obtained from the tax goes back to the customer and the entrepreneur, or is used for service provision. Then the net profit of the government is A + C - total profit earned from tax. Because the losses of consumers and entrepreneurs' advantages are net expenditures and profit earned from taxes is a net profit for the government, the net profits of the tax will be the same as the algebraic sum of these elements: - (A + B) Consumption advantage of consumers - (C + D) loss of entrepreneurs and + ( A + C) profit of Government.