Mastering IELTS Writing Task 2: Effects of Inflation on Corporate Taxation – Sample Essays and Expert Analysis

Inflation and its impact on corporate taxation is a topic that occasionally appears in IELTS Writing Task 2 questions. While not as common as some other economic themes, it’s an important subject that test-takers should be prepared to address. Based on past exam trends, we can expect to see questions related to this topic in future tests, albeit with moderate frequency. Let’s explore a relevant question that aligns closely with real IELTS exam patterns:

Some people believe that governments should lower corporate tax rates during periods of high inflation to help businesses cope with rising costs. Others argue that this approach is unfair to individual taxpayers. Discuss both views and give your own opinion.

Analyzing the Question

This question requires candidates to:

1. Discuss the viewpoint supporting lower corporate tax rates during high inflation
2. Explore the opposing argument that this approach is unfair to individual taxpayers
3. Provide a personal opinion on the matter

The topic combines elements of economics, taxation policy, and social fairness, making it a complex issue that demands a well-structured and balanced response.

Sample Essay 1 (Band 8-9)

The debate over corporate tax rates during inflationary periods is a contentious issue with valid arguments on both sides. While some advocate for reducing these rates to assist businesses in managing escalating costs, others contend that such measures unfairly burden individual taxpayers. This essay will examine both perspectives before presenting my own view on the matter.

Proponents of lowering corporate tax rates during high inflation argue that this approach helps businesses remain viable in challenging economic conditions. As inflation drives up operational costs, companies face reduced profit margins and potential financial instability. By decreasing the tax burden, governments can provide a lifeline to struggling enterprises, potentially preserving jobs and maintaining economic activity. Moreover, supporters contend that thriving businesses contribute more to the economy in the long run through increased investment and job creation, ultimately benefiting society as a whole.

On the other hand, critics of this approach emphasize its perceived unfairness to individual taxpayers. They argue that while corporations receive tax relief, ordinary citizens continue to bear the full brunt of inflation without similar support. This disparity can exacerbate income inequality and create resentment among the general population. Furthermore, opponents contend that reduced corporate tax revenues may lead to budget shortfalls, potentially resulting in cuts to essential public services or increased personal taxes to compensate for the loss.

In my opinion, a nuanced approach is necessary to address this complex issue. While I recognize the importance of supporting businesses during inflationary periods, I believe that any tax relief should be carefully targeted and accompanied by measures to ensure fairness for all taxpayers. Governments could consider implementing temporary, sliding-scale tax reductions based on company size and profitability, with smaller businesses receiving more substantial relief. Simultaneously, authorities should explore ways to provide support to individual taxpayers, such as adjusting tax brackets for inflation or offering targeted subsidies for essential goods and services.

In conclusion, the question of corporate tax rates during high inflation requires a balanced and equitable solution. By implementing thoughtful policies that consider the needs of both businesses and individual taxpayers, governments can foster economic stability while maintaining social cohesion.

(Word count: 339)

Corporate taxation during inflation

Sample Essay 2 (Band 6-7)

The issue of corporate tax rates during high inflation is a controversial topic. Some people think governments should lower these taxes to help businesses, while others believe this is unfair to individual taxpayers. This essay will discuss both views and give my opinion.

Those who support lowering corporate taxes during inflation say it helps businesses deal with higher costs. When prices go up, companies have to spend more money on things like materials and wages. If they pay less in taxes, they can use that money to cover these extra expenses. This might help them stay in business and keep people employed. Also, if businesses do well, they might invest more and create more jobs, which is good for the economy.

However, others argue that this approach is not fair to individual taxpayers. They say that while companies get tax breaks, regular people still have to pay the same taxes even though inflation makes everything more expensive for them too. This can make people angry because it seems like the government cares more about businesses than about ordinary citizens. Also, if the government gets less money from corporate taxes, they might have to cut spending on important things like healthcare or education.

In my opinion, I think there needs to be a balance between helping businesses and being fair to individual taxpayers. Maybe the government could lower corporate taxes a little bit during high inflation, but not too much. They could also find ways to help regular people, like giving them tax breaks or financial support for basic needs. This way, both businesses and individuals can get some help during difficult economic times.

To conclude, the question of corporate tax rates during inflation is complicated. I believe that governments should try to support both businesses and individual taxpayers to create a fair and stable economy for everyone.

(Word count: 309)

Key Writing Tips

1. Structure: Both essays follow a clear structure with an introduction, body paragraphs discussing each viewpoint, a paragraph for personal opinion, and a conclusion. This organization is crucial for achieving higher band scores.

2. Vocabulary: The band 8-9 essay uses more sophisticated vocabulary and phrases, such as “contention issue,” “escalating costs,” and “exacerbate income inequality.” The band 6-7 essay uses simpler language but still maintains clarity.

3. Grammar: The higher band essay demonstrates a wider range of complex sentence structures, while the band 6-7 essay uses simpler constructions. Both essays maintain good grammatical accuracy.

4. Cohesion and Coherence: Both essays use appropriate linking words and phrases to connect ideas, but the band 8-9 essay shows more sophisticated transitions between paragraphs and ideas.

5. Task Response: Both essays address all parts of the question, but the band 8-9 essay provides more detailed and nuanced arguments.

Essential Vocabulary

1. Corporate tax rate (noun) /ˈkɔːpərət tæks reɪt/ – The percentage of tax applied to a company’s taxable income
2. Inflation (noun) /ɪnˈfleɪʃən/ – A general increase in prices and fall in the purchasing value of money
3. Fiscal policy (noun) /ˈfɪskəl ˈpɒləsi/ – Government policy on taxation, spending, and borrowing
4. Tax burden (noun) /tæks ˈbɜːdən/ – The total amount of tax paid by an individual or organization
5. Economic stability (noun) /ˌiːkəˈnɒmɪk stəˈbɪləti/ – A state of steady economic growth without major fluctuations
6. Revenue (noun) /ˈrevənjuː/ – Income, especially when of an organization and of a substantial nature
7. Subsidies (noun) /ˈsʌbsədiz/ – Money granted by the state to help an industry or business keep prices low
8. Income inequality (noun) /ˈɪnkʌm ˌɪnɪˈkwɒləti/ – The extent to which income is distributed unevenly in a group of people

In conclusion, the topic of inflation’s effects on corporate taxation is a complex issue that requires careful consideration of multiple perspectives. To prepare for potential IELTS Writing Task 2 questions on this subject, practice writing essays that discuss the balance between supporting businesses and ensuring fairness for individual taxpayers. Consider exploring related topics such as the effects of inflation on economic growth or the impact of inflation on financial markets to broaden your understanding of economic themes.

As a practical exercise, try writing your own essay on the given topic and share it in the comments section below. This will help you apply the tips and vocabulary discussed in this article and receive feedback from fellow learners. Remember, consistent practice is key to improving your IELTS Writing skills and achieving your desired band score.