UK Taxation System

In 2008-2009 absolute UK government receipts have been 37.3% of UK GDP. This is as same as around  £ 10,900 for each grown-up or  £ 8,900 for every individual in the UK. The huge wellsprings of income for the administration are Income Tax, National Insurance commitments and VAT (Stuart and James, 2009).Advertising We will compose a custom exposition test on UK Taxation System explicitly for you for just $16.05 $11/page Learn More The Tax System Income Tax-The main types of available pay are the profit which originate from work, organizations, pay from independent work, benefits, salary from property, bank and building society premium and profits on shares (Stuart and James, 2009). Annual expense performs based on an arrangement of recompenses and groups of pay. Everybody has an individual remittance that is deducted from all out pay for demonstrating available pay. Available salary relies on various assessment rates that are upheld by the band wherein it falls. The addition in gr oups and recompenses begins in April which is charge year in legal indexation arrangements. This augmentation is pronounced at the hour of the yearly spending plan. Personal assessment is generally deducted through the PAYE framework. The UK Income charge framework is total where complete duty which is payable for a specific monetary year is determined based on the absolute salary of that specific budgetary year. The total framework passes on that there is no limit of year change in accordance with the expense paid sum. Kid charge credit (CTC) doesn't require any business status. It is intended for both unemployed families and lower paid working guardians. Working duty credit (WTC) is invaluable for working grown-ups with and without youngsters (Stuart and James, 2009). National Insurance Contributions: NICs fills in as duty on profit. For all intents and purposes commitments paid and benefits got don't have solid connection with one another for every patron. For 2008-2009 a few com mitments are given to the National Health Service and the rest are paid into the National Insurance (NI) Fund (Stuart and James, 2009). Case Law on the UK Taxation System The UK tax collection framework has an immediate association with the residence status of a person, which has expansive ramifications on the budgetary and administrative framework. The law of habitation and the UK tax collection are two separate ideas, yet when the law of house is applied onto UK tax assessment, at that point it achieves a social distinction by uncovering the taxation rates of two unique people with indistinguishable earnings from similar sources simply on the grounds of national inception while one individual pays less expense it is viewed as a social bit of leeway, while it is inaccessible to the next individual (Richard, 2007). HM Revenue and Customs is a functioning group of law, and includes in a circuitous and unexpected way through the procedure by deciding a person’s house status, wh ich means that segregation has its beginnings from an open position. Those experiencing segregation are those inside the United Kingdom who represent practically 88% of the 60 million occupant UK populace. The instance of illicit segregation offers ascend to two clashing results viz (Richard, 2007). The individuals who are UK domiciled must be burdened in a similar way as the individuals who are not domiciled in the UK. Non-domiciled people must be burdened along these lines as the individuals who are domiciled in the UK. In both of the above circumstances, it is viewed as unlawful to burden an individual regardless of one’s national starting point, since it contradicts the Race Relations Act 1976 (Richard, 2007, Para 6).Advertising Looking for exposition on law? How about we check whether we can support you! Get your first paper with 15% OFF Learn More Domicile is the most significant determinant in the tax assessment arrangement of United Kingdom, and consequently it is imp erative to comprehend the way of an individual’s charge treatment on annual duty (otherwise called PAYE), capital additions expense and legacy charge in the United Kingdom. Burdening an individual relies upon three sorts of private status accessible with the individual e.g., living arrangement in the UK, common home in the UK, and residence (Richard, 2007, Para 9). The case law looks to clarify the idea and use of residence to the relationship of HMRC with the Taxation framework. The case law additionally looks to clarify the assurance of a person’s habitation concerning both of the two conditions: on application or on accommodation of an assessment form (Richard, 2007). Extra-Statutory Concessions An Extra-legal concession is a sort of unwinding for citizens that diminishes charge risk to which they would not be unlimited as indicated by the severe apparent aim of the law. Most concessions depend on managing what are, in general, minor or passing abnormalities that is as per enactment. It meets with troublesome cases at the edges of the code where it is difficult to build up a legal cure (Extra-legal concessions, 2009, p. 2). The concessions go under a general application however in some particular cases, some unique conditions will be mulled over to chip away at the use of concession. Such sort of case will never be thought about where charge evasion is being done (Extra-legal concessions, 2009, p. 2). Concessions appropriate to Individuals: Traveling costs of Directors and Employees who are procuring  £ at least 8500 every year (Extra-legal concessions, 2009, p. 20). On the off chance that a worker gets an Overseas Retirement Benefits Scheme or an Overseas Provident Fund, annual expense won't be charged on those singular amount benefits (Extra-legal concessions, 2009, p. 21). Twofold Taxation Relief: Where support installments are done under a United Kingdom court request, the pay originates from a United Kingdom source. The credit help is g iven where (Extra-legal concessions, 2009, p. 23):Advertising We will compose a custom article test on UK Taxation System explicitly for you for just $16.05 $11/page Learn More The individual who was making the installment has left the United Kingdom and become the occupant of another nation. The installments are made out of the person’s pay in the nation of his living arrangement and is at risk to pay charge there The individual is the occupant of the United Kingdom and is the payee of the abroad assessment (Extra-legal concessions, 2009, p. 23). Passing of Tax Payer before due date for installment of assessment if a citizen bites the dust before his expense installment due date and his agents can't pay the obligation, the due date will be later of (Extra-legal concessions, 2009, p. 25): The typical due date Thirty days from award of organization Statements of Practice It explains the Inland Revenues Interpretation of Legislation. It additionally clarifies the technique with which the Department executes the law by and by. They don't impact a duty payer’s directly in which he can contend for an alternate understanding when it is required to interest the General or Special Commissioners. The accompanying Statements of Practice (SPs) has a minor concessionary component (Extra-legal concessions, 2009, p. 19): SP A34: Relief for premium installments: advances for buy or acquired properties SPD1: Part removals of land SP4/79: Life Insurance premium help on Children’s arrangements SP10/84: Foreign financial balances Statute of the UK Taxation framework Taxation is the most significant and direct wellspring of pay for any legislature. It is the national obligation of each resident and organization to pay their charges that guarantee the advancement of foundation, help set down government assistance arrangements of the administration, and so forth. Throughout the years, the arrangement of tax collection has experienced numerous adjustments so as to improve but then tackle the difficulties of control so as to keep up a sound financial framework (HM Revenue Customs A Code of Practice on Taxation for Banks, 2009).Advertising Searching for paper on law? How about we check whether we can support you! Get your first paper with 15% OFF Find out More The job and noteworthiness delighted in by banks is unmatched in its commitment to the tax collection framework, and subsequently set the best expectations of corporate administration (HM Revenue Customs A Code of Practice on Taxation for Banks, 2009). The striking highlights of the code on UK Taxation framework are as per the following: It involves worry that in the ongoing past, defects and vulnerabilities have been uncovered because of advances in the field of innovation, and thus the London culmination of G20 pioneers proposed a few measures on universal financial management (HM Revenue Customs A Code of Practice on Taxation for Banks, 2009, Page 6) to engage and empower the legislatures to rapidly take a shot at connecting every single imaginable escape clause the administrative framework (HM Revenue Customs A Code of Practice on Taxation for Banks, 2009). In the United Kingdom, this type of strengthening is occurring through the rule or likewise alluded to as ‘The Code of Practice on Taxation for Banks’, and the administration of UK anticipates that its residents and organizations should agree to the Act in a mindful way. The recommendation of this Act really draws out its points of interest in the accompanying manners (HM Revenue Customs A Code of Practice on Taxation for Banks, 2009): Banks can eliminate their expense liabilities-be it recuperation of VAT caused on exchanges, limiting on annual assessment and national protection commitments. Give monetary help to clients Having access to an enormous pool of assets The rule weights on two subjects because of government’s encouraging act between huge organizations and HMRC. The 2 key advantages are: straightforwardness and predominant administration. The rule is the source through which enormous organizations are required to think of a hazard structure on so as to go along and help fabricate a vigorous budgetary framework in a strong relationship with banks. Furthermore, the code or th e resolution likewise empha

Human Trafficking †Sexual Slavery Free Essays

In all actuality, in any case, that few out of every odd human dealing case is pulled from a Lima Nesses film; any sexual undertaking including outside workers and underage young ladies whether or not or not it is willful is viewed as human dealing (Baker, 2). So as to free the universe of this disgusting, harming enterprise that straightforwardly clashes with the ethical standards of opportunity and self-esteem, we should focus on spreading mindfulness, annihilating aggressive behavior at home and idealizing the law requirement framework. Synopsis If you were to meet Syrupy Chain, ;a tubby cheeked multi year-old with an irresistible giggle (Pasta,l)†, you could never figure that she had to engage in sexual relations with several men before the age of 10. We will compose a custom article test on Human Trafficking †Sexual Slavery or on the other hand any comparable point just for you Request Now At Just seven years of age, Chain was sold Into a Cambodia massage parlor, where she and many other pre-pubescent young ladies were constrained o have intercourse with in any event 20 men every day (Nair) Syrupy was a survivor of sexual bondage, similar to an expected 12 million others around the world. The matter of purchasing and selling people is a 32 billion dollar worldwide endeavor, and regardless of being unlawful in for all intents and purposes each nation, twenty-7,000,000 individuals are oppressed around the world (Pasta, 3). Bondage, particularly sexual subjection, deflects common connections, empowers the typification of ladies, keeps development from destitution and Isn’t vital for a country’s budgetary or social endurance. Sexual servitude has Its foundations in family brutality, power introduction and money related urgency. In spite of the fact that numerous nations, for example, Thailand, the informal youngster sex capital, are endeavoring to get serious about the sex exchange, ineffectual law authorization, budgetary motivators (the sex the travel industry makes millions per year in Cambodia alone) and absence of inspiration keeps the business from ceasing to exist all together (McClellan, 2). From China and Cambodia to Mexico, Sweden and our own one of a kind United States, the Sex Trafficking Industry Is quickly heightening, turning into a significant underground endeavor that crosses social limits and emphasizes age-old sexual orientation battles. Despite the fact that human dealing in the United States is an uncontrollably disregarded and no-no subject, 14,500-17,500 individuals are dealt into the US every year and a great many young ladies and young men are seized or forced Into various types of servitude every year (Baker, 2). The CIA assesses that 30,000-50,000 of these dealing casualties are sex slaves (Landsman, 2) and the MGM, the Negotiation and Conflict Management Group, expresses that 100,000 kids US youngsters are survivors of commercialese sex abuse every year (Baker, 2). A significant number of these undermined youngsters are casualties of local maltreatment, experiencing childhood in broken homes and relying upon pimps as father floods. Pimps capture such little youngsters by picking up their trust, providing the adoration that was destitute at home and using the girl’s recently discovered reliance to control r Nine common age AT a sex following volt Is plunging; In ten past most young ladies were in their late teenagers or early ass’s, however now the normal young lady is from 12 to 14 years of age (Landsman, 6). The life of a US prostitute is uncontrollably perilous and unsafe to the advancement of under-matured young ladies; the casualties are gotten through arduous mental and physical maltreatment by their monetarily inspired pimps, the ongoing interest for fierce ND forceful sex making the occupation become more harming than any time in recent memory (Landsman, 6). Intermittently, if these young ladies break and come back to their families, they aren’t acknowledged go into their networks and the young ladies come back to the main home they know †their pimp. In any event, when offered assistance by associations, for example, GEMS (Girls Education and Mentoring Service), numerous casualties slip once more into â€Å"the life† because of their absence of certainty and reliance on their pimp. Since they were constrained into the business at such a youthful age, it’s their solitary method of supporting themselves (Very Young Girls). Every single one of these variables forestalls American sex slaves from ascending to a decent life that benefits society and demonstrates that harming impacts of the US sex industry. While American dealing isn't also exposed as its remote partners, the whole venture uncovers profound established issues, for example, aggressive behavior at home and neediness that disallow wrecking the sex business. Sex bondage is uncontrolled in Asian nations, for example, Thailand and Cambodia, bringing about the sexual adventure of underage young ladies and obligation arranged detainment. Prostitution makes up 59-60% of Thailand government spending plan every year (McClellan, 1), while there Asian nations have numbers in comparable extents. Despite the fact that dealing laws are set up all through the cotangent, the neediness and money related edginess of nearby specialists hinders the counteraction of such issues (McClellan, 4). In contrast to America, Asian pimps and massage parlor proprietors once in a while bait young ladies into their ventures utilizing appeal or love, yet rather go after penniless guardians by extending Employment opportunities in the city, a superior life or at times Just a decent arrangement (Luggage, 2). There are whores in Cambodia and 35% are minors (Landsman, 4). Young men and young ladies as youthful as babies are sold into sex bondage, where they are kept in miniscule, prison like rooms with remises of opportunity toward the finishing of their agreement. Youngsters are as a rule compelled to engage in sexual relations many times each day with outsiders, consumed, cut and mishandled at the scarcest notice of dissent (Landsman, 4). Asian nations place an amazingly high incentive on virginity, accepting that intercourse with a virgin sustains youth and recuperates clinical afflictions (Luggage, 3). Shockingly, this outcomes in Sais’s title as the kid sex capital of the world.. The future of a whore in Cambodia is around twenty-eight, while 20% of the young ladies are HIVE positive, a measurement that can't be reified since most of sex laborers never get a blood test (McClellan, 4). The whores, both youngster and grown-up, are only items; they are universal to such an extent that they have gotten expendable and frequently murdered when they stop to be helpful (McClellan, 2). Because of this, Asia has tremendous sexual orientation uneven characters, absence of money related open doors for half of its kin and minimal possibility of ascending from third-world status. From pedophilia to disgusting conditions and total servitude, the Asian sex subjection framework is one of the most hazardous and destructive around the world. Despite the fact that the Cambodia and Thai sex industry are all around broadcasted as far as houses of ill-repute ND nearby men, sex the travel industry, â€Å"tourism sorted out with the basic role of encouraging the affecting of a business sexual relationship with a child,† is a to a great extent unreleased understudy (Song, 1). Consistently, tonnages AT grown-ups venture out ten globe to explicitly misuse youngsters as youthful as 5 years of age, while a lot more discover such chances while going for business or delight (Nair). As indicated by the International Labor Organization, nations, for example, Thailand, India and the Philippians report that 2 †14% of their GDP originates from sex the travel industry and other related fields (Nair). This repulsive industry that incorporates 2 million kids is pervasive in excellent, very much voyaged nations with far reaching destitution (Song, 2). Little youngsters with urgent guardians and absence of instructive open doors are frequently deceived or sold into the sex the travel industry with no thought what anticipates the (Nair). Another significant issue in completion sex the travel industry is the Internet; dealers and pimps can put online profiles of their casualties, while remote sex vacationers can trade areas, stories and tips (Nair). An insignificant Google search turns up terrible data on what anticipates the normal sex vacationer in Thailand; fastidious subtleties depicting the co’s and don’t of the Patty Sex Scene. The site portrays the risks of confiding in the ladies, wearing watches, giving them tips or regarding them as anything short of whore’s, while empowering the audacious sex vacationer to try different things with gabbros and bare shows (so the purchaser â€Å"knows what he’s going to get†) and take additional money to make up for the unavoidable â€Å"sex-crazes† (wry. Mayhap. Com). More profound investigation into the site uncovers subtleties on Soapy Massage Parlors, a Thai Sex Tourism Attraction that includes immense amounts of exceptionally prepared, pre-pubescent young ladies utilizing their bodies to take part in a dreamland of air pockets and sex Wyandotte. Mother). Despite the fact that most sex ventures stay inside a solitary nation o mainland area, the sex the travel industry causes strife among nations and changes the connections that they would somehow or another have had. The whole business corrupts females and kids, manhandles multicultural l imits and proceeds with the pattern of sex lopsided characteristics. In contrast to American and Asian nations, Eastern Europe relies upon guarantees a superior future to draw potential casualties into the sex exchange. It is assessed by European Union Nations that there are more than 500,000 ladies in prostitution in Europe (Kristin). Dealers utilize anecdotal Jobs as models or babysitters in the US to bait young ladies into the framework, as a rule paying their own air toll and surrendering their travel papers. By and large the ladies are then held hostage experiencing significant change nations, for example, Mexico, holding on to be moved into the United States and sold into sex subjugation (Landsman, 2). Prostitution was exceptionally uncommon in the Soviet Union up until around 22 years prior, when the socialist government fell and the nation was thrown into neediness (Landsman, 5). An outcome, numerous young ladies went to the possibilities accessible in the US (Landless 2). In spite of the fact that numerous ladies knew that prostitution could be engaged with the open doors offered, the celebrated thoughts of sales introduced in motion pictures like Pre Women (a best 10 film in the zone) protected reality of a frightful industry (Kristin). When the g

Understanding the Free Rider Problem

Understanding the Free Rider Problem Have you ever been in a situation where you have felt like you pull more than your weight in a project, at work, in your neighborhood or even in your own home?Have you somehow ended up doing (almost) everything while others are slacking off?Imagine this: you are preparing a meal for your family. Everybody is eating the delicious dinner that you made, bought ingredients for, set up the table, and did all the dishes. Everybody enjoys it, but they did nothing to contribute to the experience.Or this other, very well-known scenario to even younger children: There are five of your classmates in your assignment group. You and Tom research and gather information; Kate ends up typing the entire project, but what about Bill and Jane? Jane makes a suggestion every now and then, and Bill says that this assignment is well beyond his knowledge and/or interests, and decides to stay on the sidelines and not help at all.Now, at the end of the day, all five of you get an A from your teacher, regardles s of how much you contributed to the overall success of the project.Do you feel okay about this? How do Bill and Jane feel? Would you do it again in the same way? Would you do it at all or would you take note from Bills handbook?What these examples illustrate is the instinct of all the people, in general, to get as much as they can out of a certain situation with investing as little resources (energy, time, money, and so on) as possible.In the Social and Economic science, it is called the Free Rider Problem.WHO IS A FREE RIDER, AND WHAT IS THE FREE RIDER PROBLEM?A free rider is a person who uses a certain good, resource or service without actually paying for it, or if they are contributing in some way, they are not contributing enough.This leads to the overconsumption or underproduction of that good, which eventually leads to either partial or complete market failure. From our example, we can deduce that both Bill-who does not contribute to the project, and Jane-who contributes rath er insufficiently are free riders in this scenario. The other three Tom, Kate, and you are contributing to the project.On a more global scale, the contribution can be made in several ways, depending on the type of a good or a service that is in question.If you are thinking about services like free healthcare- you can either contribute by paying taxes, donating money or even time, by volunteering, for example. In other cases, such as national defense, all you can do is pay the allocated taxes.The free rider problem happens mostly with public goods like national defense, access to clean air and water, flood protection, free knowledge (public schools, libraries, and online educational content), roads, bridges, sanitation regulations and so on.The problem with Public goods is that they are non-excludable and non-rival. What does that mean?A good is non-excludable if people who do not pay for it cannot be easily prevented from using that particular good.Lets take a look at an example: C lothes are an example of excludable goods because it is easy to prevent people who do not pay for clothes from using them (note: think about purchasing clothes, not donations for the underprivileged).However, national defense is a non-excludable good, since it is hard, no, not hard- it is impossible to prevent people who did not pay taxes for national defense from benefiting from it.They are protected the same way as those members of the society who do pay for national defense.A service or a good is non-rival if when one persons use of the goods does not reduce the ability of another person to use the good.Clothes are a rival good since if one person is using them; another person cannot use those same clothes at the same time.On the other hand, if a person is protected by national defense from, lets say, bombing; that does not prevent other people, even those who do not pay, to benefit from the protection.And, additionally, the people who do pay for it do not get the extra protectio n just because they have paid.Since it is really hard to exclude the non-payers, there is an incentive not to pay and try to free ride.Rational individuals would never want to contribute to the allocation of public goods because a rational individual knows that as soon as they make a payment for it, other people are going to benefit from it.So, then they are thinking: Why should I do that? Surely I would have to let other people pay for it and then I free ride on somebody elses payment.But if everyone decides not to pay and free ride, the public good does not get provided as there are not enough funds to sustain the market.The final consequence in the example of national defense is that there is none and that in the unfortunate case of a war, the country will not have the resources to defend itself and all of its people, regardless of whether they paid for it or not.Because of that, there is a missing market for public goods; private companies do not want to produce them as there is no profit to it.Take street lights, or lighthouses, or bridges, for example, although they are socially desirable by all, they are not provided for willingly. So, who pays for those? Well, the government does.It is interesting to note that the free rider problem occurs as an issue of the mixed economic system (free market economy combined with command economy), which is the newest and most common in this day and age.WHY DO PEOPLE CHOOSE TO FREE RIDE? As we already mentioned and illustrated in the above examples, it seems nonsensical for the people to pay for something if others are going to use it for free.Why would they pay for it if they think that they can benefit from it anyway-somebody else will make that contribution?There are two illustrations that can further explain the free rider problem and the sociological or rather behavioral aspect of it, and those are The Tragedy of the Commons and the Prisoners Dilemma Game.I.  Free Rider Problem and the Tragedy of the Commons With all of our examples, if you decide not to contribute to the public good, you are expressing the innate tendency to reap as many benefits as possible with as little work possible.In such cases, the benefits are larger for you in the short term; however, the consequences for society are far greater in the long term.Those actions are selfish, but people are wired this way- to take care of themselves and disregard the wellbeing of others, and themselves as a part of society as the end result.This is illustrated in grabbing more than your share of resources that should be equally used by all and equally distributed among all the members of the society.“What is common to the greatest number gets the least amount of care.”   Aristotle, PoliticsThe incentive to do what is best for you rather than what is best for everyone is the root cause of something that economists call the Tragedy of the Commons.This term is used to illustrate economic and social situations in which every person has the same access to the same good as any other individual- like street lighting, or a public park, for example.The idea in this theory is that those common goods that everyone has access to are often misused or exploited.It explains most of our environmental problems like air pollution, deforestation, the killing of many endangered species, and overfishing.The term was coined way back in 1833 by William Forster Lloyd, a British economist, who wrote a pamphlet on a hypothetical situation of the British farmers over-consuming the grazing areas by letting more than the allocated number of cows feed on the areas.As a result, the individual benefits were greater in the short term, but the grazing area was eventually destroyed.Garrett Hardin, an ecologist, popularized the term more than a century later by raising attention to overusing natural resources that can cause issues that could be catastrophic in the long run, arguing for the importance of the public good rather than individuals a lone.In many places in the world, there are more fish being pulled out of rivers, lakes, and oceans than the fish that are being born.Now, this is not just bad for the fish, and the entire ecosystem that will suffer if an entire species would be removed from it, but for the fishermen as well. As the resources are depleted, fishermen find themselves without the job.Isnt it more beneficial for more of them to work for a little less profit, but keep their jobs for the rest of their working lives, rather than have larger profit for a short period of time?So why are they not conserving, allowing fish to reproduce and generate more resources for the future?Take a look at the incentives. If a few environmentally conscious fishermen decide to give the fish the time to spawn, then some other fisherman will harvest them instead. If you cannot prevent other people from exploiting the resource, then you have an incentive to exploit it yourself and take as much as you can and as quickly as you c an. But with everyone following that logic, the finite resource gets pillaged.There is an entire subfield of economics that is focused on addressing and solving issues like this, and it is called environmental economics.However, the principles of the Tragedy of the Commons can be successfully used to illustrate the social causes and motivation for free riding.When we take street lightning into consideration, the consequences are not as far-reaching as with destroying entire ecosystems, but lets explain how the Tragedy of Commons applies to this problem.If you pay for the street light you are safe to wonder about your neighborhood at night, knowing that you will be less likely to stumble and fall. But so will your neighbor who did not pay for the street light.If you decide not to pay, and your neighbor still does not pay, you will both have a larger chance of injuring yourselves; it will be harder to notice a potential robber, you will be stressed and potentially develop a health co ndition related to stress.This is just a hypothetical and highly unlikely situation.However, stop and think for a moment how much you would hurt yourself, the others and all future generations by being socially and economically unconscious and selfish, especially when you decide to free ride on issues that are beneficial to all members of society.II.  The Free Rider Problem and the Prisoners Dilemma GameThe Prisoners Dilemma Game is a part of game theory (studies how mathematical models can show the process of rational decision-making).The idea came from Flood and Dresher in 195o and was named and shaped up to what it is today by A.W. Tucker.The main idea behind the game is to show that, given a choice to either cooperate or not cooperate, the majority of rational people opt not to cooperate regardless of how this might not be in their best interest. The original prisoners dilemma game includes two people with a rather short possible sentence with the option to lower the sentence ti me if they cooperate and betray another.If one betrays and the other one does not, the one who betrayed goes free and the other one gets a bigger sentence.So, why does it then happen that in most cases, both prisoners decide not to betray?The dilemma occurs because, from a personal standpoint, it is clear that they can only gain if they are betraying the other, regardless of the fact that the mutual benefit is larger if they both cooperate.This comes as a result of not knowing what the other prisoner would do, and having no control over it.So how does this apply to the free rider problem?We stated that the free rider problem occurs that the public goods, resources or services are divided equally among all the members of the society regardless of how much, or even whether the members of the society pay/contribute to the use of a certain public good.Let us imagine the next scenario:There are two people- Jake and Kim who are thinking about paying for public service. Lets say that the l ocal community has decided to open up a new library, and each of the members of the community is asked to contribute by paying 6$ to help build the library which will be available for everyone to use.The government has taken into account how much money people spend on buying books on average and came to the conclusion that the benefit of a 6$ contribution will be 10$.This is great since the benefit is larger than the cost. How does it happen that each member of the community is motivated to free ride rather than pay the 6$ and enjoy the new library?Let us examine how Jake and Kim rationalize the free riding on this occasion.If both Jake and Kim pay the required amount of money, they will each gain 10$, and the individual net gain is $4, and the complete gain for the society is 20$.If Jake contributes and Kim does not, the total gain is only 10$, and since the public goods are distributed evenly, Kim will get her 5$ in net gain with no contribution whatsoever, while Jake will have th e -1$ net gain since he paid the 6$ cost and gained only 5$. The same process goes for the situation that Kim contributes and Jake does not.If both Jake and Kim decide not to contribute there will be no cost but subsequently no gain either.This is where rationalizing and the incentive to free ride comes to action.Since Jake does not know for sure if Kim will contribute, he is worried that only he would pay for the library which would be available for Kim to use as well, he will lose 1$, and she will gain 5$.Kim is thinking n the same way. Since we assumed that both of them are rational people, they will most surely decide not to contribute at all as it will diminish their chance at a loss, regardless of the benefit they would have if they actually do contribute to the building of the library.If the majority of the people in this hypothetic community thought in this way, there would be insufficient or no funds at all for the government to build the public library so the community wil l be left without one, and possibly spend more money on buying books in the long run, than if they did contribute without thinking about their individual needs that are more beneficial, short term.ARE THERE SOLUTIONS TO THE FREE RIDER PROBLEM?Since most of the public goods are government funded, it is up to the government to find a way to eliminate the free riders.There are several ways in which the government can do that.1. TaxationIf the government finds that the fire department in your community costs X amount of dollars, they should divide the cost to the entire number of the contributing individuals and require them to pay the taxes.In that case, the fire department will be sustained, and everybody will be able to use this public service in the time of need. Since the taxes are mandatory, the free rider problem is eliminated.Both the cost and the benefits are evenly shared among all the members of the community.Sometimes, the need for taxation feels like a punishment to people who initially did not want to pay for a certain good, but it seems like the only certain way to fix the free-riding problem.Again, people are acting on their best individual interest by paying what is required of them and not risking the additional fees if they do not.2. PrivatizationIf a government makes a public good a private one, it addresses the problem of non-excludability.If they put a toll on a bridge, you have to pay to use it, so some funds for more bridges and roads, and repair of the existed ones come through that money. If you do not want to pay the toll, you will have to find another way to travel where you need to.3. DonationsFor public goods that are not as expensive as sanitation infrastructure, roads or national defense and healthcare, soliciting donations may be the way to make up for the free riders.The act of donating small amounts of money to public parks, libraries or museums will not completely eliminate free riders, but it appeals to peoples altruism and mor ale.Those donations can be used books, clothes, canned goods and so on, not just money.FINAL WORDThe free rider problem occurs as a consequence of peoples inherent need to work/pay as little as possible and gain as much as possible.We will always look for what is best for us at the moment, rather than looking at a bigger picture and doing something beneficial for the community whether it be a local animal shelter, a states defense system, or worlds environmental problems.What we should get from this text is that it is in our nature to look for an easy way out and rationalize when we are tempted to free ride, however, it is better to focus on the long term well-being of our entire community, since it is an investment in the future of this world and the generations that are to come.It is up to us to become more socially, economically, and environmentally conscious, and evade our impulse to free ride, and it is up to the government to implement means that will ensure the well-being of all.