Taxes are money that people and businesses give to the state. But why does it need this money?

Imagine that the state is a big house in which all people live. It must be maintained – kept clean, tidy and safe, so that everyone can feel good and protected if they need support. This requires money. And it comes from the taxes of people and businesses. It is also important to have order and rules. The state ensures that they are observed.

 

What is paid for with taxes?

With taxes, the state provides public services – such as education, healthcare, defence, which are used by everyone. This way it provides salaries for doctors and nurses so that they can treat people. Thanks to taxes, there are schools with playgrounds where children can do sports and play, free textbooks and salaries for teachers. This way, all children can learn.

The state uses the taxes collected to fund police and fire departments that take care of the security and protection of people, to build and maintain roads, bridges, parks, playgrounds, public buildings such as museums and libraries. With taxes, the state helps to preserve nature so that there is clean air and water, forests and animals are protected. All this makes life better and safer.

Some people have difficulties in life because they are lonely, elderly or sick, have lost their jobs or have experienced some kind of disaster. The state provides assistance to people in need, provides them with shelter and food so that no one is left alone in difficult times.

 

What kind of taxes we have?

People pay taxes for different things. When you and your parents buy something from the store – for example, bread, clothes or a toy, part of the price includes tax. It is called value added tax (VAT). You can see how much it is on the receipt. The merchant transfers this money to the state.

Similarly, when your family pays for a service – a haircut, car repair or a visit to the cinema, a VAT is also included in this price.

Other taxes are those that are related to the income of adults. For example, if they go to work and receive a salary, part of it is withheld as a tax, which is called income tax. When they work for themselves, adults also pay such a tax.

If your family has a house, apartment, car or land, as well as if they buy or sell them, they pay taxes on them. This money is collected by municipalities and helps maintain streets, lighting and parks in localities.

Not only people, but also businesses pay taxes. They produce goods or offer services and thus earn money. They give part of their profit to the state as tax. The more they earn, the more taxes they pay. Therefore, it is important for the state that businesses work well and that people buy more goods and services. This way, the state will also receive more money from taxes.

Businesses also have other obligations to the state. For example, so that their employees can get medical treatment and have a pension one day, businesses pay social security contributions. Part of these is paid by the employees, along with their income tax. People who work for themselves are also required to pay them.

When everyone – people and businesses – pays taxes and other obligations, the state has more opportunities to build schools and hospitals, maintain roads and parks, and help people in need. In this way, everyone helps the state to be a nicer and better place to live for everyone.