Review of Junior Cycle Business Studies Revenue and Irish Tax Institute Submission 30 January 2014
1 Background Understanding the basis for taxation and having a good level of awareness of entitlements and obligations as regards taxes and duties 1 are key contributors to creating and fostering a culture of compliance with tax obligations. Appropriate education, targeted at the student population, is a very useful way to start the process of creating an awareness and understanding of tax. It creates the appropriate context for the future interaction of young people with the tax system as they progress into adult life, whether that journey is through further education, the take up of employment or starting their own businesses. In the foregoing context, Revenue and the Irish Tax Institute are of the view that there is scope for the inclusion of a taxation strand within the Business Studies syllabus dealing with the fundamentals of tax, its role and purposes and what it means to be compliant with tax obligations. We have collaborated in putting together this submission (the Submission ) to the National Council for Curriculum and Assessment (NCCA) in response to the Background Paper and Brief for the Review of Junior Cycle Business Studies of November 2013 ( the consultation paper ). In preparing this Submission we have had regard to the Department of Education and Skills document A Framework for Junior Cycle of October 2012. We are conscious of the age profile of the students covered by Junior Cycle and therefore propose that the content of the taxation strand would primarily address the fundamental and practical concepts of tax as a key foundation for their exposure, as they get older, to matters related to tax. We envisage that students would learn some of the fundamentals about tax through the use of interactive tools covering topical and interesting examples and issues particularly relevant to their lives as students. It is envisaged that the taxation strand would be appropriate for students in their third year of the Junior Cycle. Upon a preliminary analysis, it is felt that there would be sufficient material relevant to their development to support approximately 10 hours of classroom time but the ultimate time allocated to this strand would depend on the final content of any approved strand. 2 Experiences of Business Studies in Junior Cycle The consultation paper outlines the challenges that teachers and students of Junior Certificate Business Studies encounter including the extensive syllabus, the different proportions allocated to Business, Economics and Accounting, the relevance of the material nowadays and the limited assessment focus on written examinations. We note, in that context, the reference to the research of the Department of Health and Children from 2011 referring to the desire of students for more emphasis on practical subjects. We strongly believe that developing an understanding and appreciation of the key principles of taxation has a real practical application for students and forms an important bedrock for their actions as future citizens. 1 In this submission references to tax/taxation include taxes and duties. 1
Despite falling numbers 2, uptake of Junior Certificate Business Studies remains within the top ten chosen subjects. In light of this, and recognising taxation (although studied at a computational level as part of the Mathematics syllabus) is not included on the Business Studies syllabus, Revenue and the Irish Tax Institute believe that it is opportune to include a taxation strand in the Business Studies syllabus. We are interested in and committed to collaborating with the NCCA towards that end. Although only a small component of a larger business discipline, an understanding of the basis for taxation and how the tax system operates is fundamental to good citizenship. Given how embedded taxation is in the overall business field, we feel it is essential that students are provided with an appropriate knowledge of and exposure to, the subject of taxation to support them in understanding their responsibilities as future taxpayers and as good citizens. A practical approach to learning would ensure that students can see the intrinsic link between business and taxation and the services and supports provided by the State. It would also clearly show and underline the relevance of taxation to their own lives, the lives of their families and society as a whole. This would empower students to take responsibility for their own tax compliance by, for example, introducing them to the primary forms of taxation that may impact on them as students/young adults. The inclusion of such a strand, firmly focused on practical application, would enhance and augment students skills, for example, by complementing financial/mathematical and literacy skills. It would also be important to their general development by inculcating students with an understanding of and appreciation for the interaction between tax and the citizen in society. This would further create and enhance an appreciation of the importance and benefits of a voluntary tax compliance culture focusing in particular on the role of the citizen, business and Government. 3 Business Education for the 21 st Century 3.1 Business Education for the 21 st Century The consultation paper discusses how globalisation is fundamental to wider concerns and stresses the need for informed, proactive young people and citizens who have an awareness of, and can critically assess, the inter-connectivity between the local situation and the wider national and international economic context. Through a taxation strand, students would learn that taxation regimes can have a significant impact on economies, and the potential influence of the tax regime on investment decisions by business with the consequent implications for employment and wealth creation. The consultation paper highlights the new era of technological advancement that supports the business community. 2Table 1 Page 9 of the consultation paper 2
Technology is fundamentally changing how companies and individuals are operating and engaging with technological change is integral to the world of business Within a taxation strand students can learn that Revenue is to the forefront in deploying information technology innovatively and that effective, secure and reliable 24x7 electronic services are available to make it as easy as possible for customers to meet their compliance responsibilities and claim their entitlements at a time that suits them best. The consultation paper references the relationship between the economy, social issues and the environment and how cooperation between the economic, scientific, political, corporate and civic sectors on a local, national and global level is required in order to balance the respective needs. In a taxation strand, students appreciation of the principle of fairness could be developed, focusing for example on how Revenue and citizens mutually recognise basic rights and responsibilities (Customer Charter) and the reasoning behind why and how Revenue pursues those who are non-compliant. It could also provide students with a background to the shadow economy, what it is, how to recognise it, its negative impacts and foster an understanding that engaging in the shadow economy is illegal, negatively impacts on legitimate business, and can be damaging to the environment and indeed to personal health (e.g. arising from purchase of counterfeit items). 3.2 Widening the Focus of Business and Business Studies The consultation paper points out that an education in Business and Economics is important for everyone including those who do not pursue a career in business and should equip young people with the knowledge, skills and attitudes required to develop an understanding of the relationships within sectors and contribute to enabling them to effectively negotiate the world around them. Including a strand on taxation in the Business Studies syllabus would support this. It would equip students with an appreciation of how to be, and why one should be, a tax compliant citizen, contributing to an understanding of: how the government and society function, and the role of tax and the taxpayer in this context. The student could be provided with a student-friendly overview of various taxes and introduce them to the workings of the taxes with which they are most likely to interact either as students or when they move into early adulthood. This understanding would be developed through use of specific, understandable and relevant examples for students evident in their everyday lives. 3
3.3 International trends in Business Education (a) Financial Literacy As referenced in the consultation paper, the National Steering Group on Financial Education has found that financial capability is one of the most important life skills that any person will ever need. In addition to the financial competency framework being included extensively in the compulsory elements of the school curriculum, this group recommended that personal finance education be incorporated into elective subjects and that financial capability should be embedded as a core value in the formal education system. Understanding taxation is intrinsic to financial capability. Its inclusion in the Business Studies syllabus would cultivate a sensible and ethical attitude towards income and encourage students to take responsibility for planning their financial affairs, particularly with regard to their future tax obligations. (b) Education for Entrepreneurship and for Sustainability Taxation regimes impact the prevalence of entrepreneurship within any jurisdiction. Taxation is a key consideration that businesses and entrepreneurs must factor into any successful business model. It is recognised in the consultation paper that entrepreneurship and education have been highlighted as areas increasingly being represented in curricula and specifications internationally. In this context it is worth noting that many jurisdictions have incorporated taxation as part of their education cycles including the UK, America, Canada, Singapore and Australia. (c) Literacy, Numeracy and Other Skills Including a strand of taxation will support literacy, numeracy and other key skills grounded in the Framework for Junior Cycle. Students will develop their literacy skills through reading, researching, interpreting, critically assessing and discussing a variety of taxation literature ranging from technical, social to historical. A taxation element of the Business Studies syllabus will enable students to hone their numeracy skills. Students will obtain an understanding of the different computational scenarios together whilst developing and augmenting their mathematical skills to enable them to carry out the calculations. Students will appreciate how they must take responsibility and manage themselves when making financial decisions and considering how the taxation implications of certain life events must be managed effectively in order to plan their finances. 3.4 Statements of Learning Having reviewed the key statements of learning associated with Business Studies, Revenue and the Irish Tax Institute are of the view that a taxation strand would align itself closely with most, if not all, of the relevant key statements. 4
4 Conclusion The consultation paper outlines how business education in the 21st century needs to equip young people with the knowledge, skills and attitudes to understand the relationship between the economy, society and the environment and to enable them to function competently in a world that is becoming increasingly more complex. Incorporating a taxation strand into the Business Studies syllabus would provide core, lifelong skills and understanding as regards the interaction of tax and the citizen in society by: 5 Contact Points introducing students to the primary sources of information on taxation matters and the supports available to be compliant; empowering students to take responsibility for their own tax compliance by introducing them to the primary forms of taxation that may impact on them as students/young adults, and creating and enhancing an appreciation of the importance and benefits of a voluntary tax compliance culture amongst the student population focusing in particular on the role of the citizen, business and Government. If you wish to discuss any aspect of this Submission please contact: Maresa Hempenstall Press Officer Office of the Revenue Commissioners Blocks 8-10 Dublin Castle Dublin 2 DD: +353 (1) 8589237 Mobile: 0872342993 Or Cait Monagher Tax Manager Education Development Irish Tax Institute South Block Longboat Quay Grand Canal Harbour Dublin 2 DD: + 353 (1) 663 1718 Revenue & Irish Tax Institute 30 January 2014 5