Characteristics of a good tax system pdf. Characteristics of a Good Tax System 2019-02-02
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Important Characteristics of a Good Tax System
Availability of information when needed. I think there are many character traits and habits that would make a good epidemiologist. Nevertheless, as a guiding policy, a good tax system in any country with any background must seek the maxim of least aggregate sacrifice in its taxation policy. It should be so balanced that every citizen should contribute to the exchequer. Any suggestion for modifying tax rules raises the question of how to compare the proposed changes to either existing rules or other possible alternatives.
What Are the Characteristics of a Good Tax System?
From the economic effects of taxation, the major consideration is to prevent the tax system from becoming too much of a dis-incentive on effort, initiative or enterprise. There should be a large number and variety of taxes, so that it can touch all sections of the people in the society. All attempts at equality will be a myth, without the tax being certain. Productivity of a good tax system may be interpreted in two ways- i the tax system should yield a satisfactory return to the government to meet the public expenditure, and ii the taxation system should be such as not to produce any adverse effect on the productive capacity of the country. In developing countries, the share of tax revenue as a proportion of national income is low as compared to the developed countries. A complex as well as a complicated tax is bound to yield undesirable side-effects. The government can borrow loans within the country and from outside the country.
Canon of Co-Ordination : In a federal system of government, taxes are imposed by the central, state and local governments. Hence later writers on public finance like Bastable, Shirras, and Mrs. The burden of tax in a good tax system should be the minimum and just. This canon means that taxes should be able to avoid undesirable effect upon the economic system of the country. Recent decades witnessed little progress in the development of principles of taxation. Taxpayers are required to make certain payments regardless of their individual disposition in the matter. There are two important concepts of equity: horizontal equity and vertical equity.
To make the tax system sufficiently productive it should be broad-based and both direct and indirect taxes find place in it. Deadlines, time needed to complete the project, costs associated with the project, and priority needs are apparent in these criteria. Similarly those taxes, which are taken from surplus income, reduce funds available for private consumption and investment. Diversification in a tax structure will demand involvement of the majority of the sectors of the population. Taxation system should also be such that it meets the requirements of increasing state activity and achieves the objectives the society has placed before it. In other words, the certainty of liability must be known beforehand.
It means there must exist not one kind of taxes but all types in the right proportion. However, the printing of paper money is normally avoided as a source of revenue because its use is too easily abused. Another example is export subsidy given to export industries to boost our export to foreign countries. Certain to the tax payer 3. Some of these changes are minor changing a rate or adding a deduction while others may involve major substantive changes changing from an income tax to a consumption tax or taxing online transactions. Adam Smith first devised the principles or canons of taxation in 1776. It should cause minimum aggregate sacrifice.
What are the characteristics of a good tax system? Discuss the advantages and disadvantages of the introduction of a broad
In the case of a fee the benefit is measurable 2. They generally arise as a by-product of the administrative function of the government. It represents a payment out of the income of the people. Nevertheless, it is advised that consumption tax should not be imposed in Hong Kong at present. For the attainment of these goals, there must be built-in-flexibility in the tax structure.
What Are The Characteristics Of a Good Tax System?
Horizontal equity stipulates that taxpayers in similar financial conditions for instance, those belonging to the same socioeconomic class should pay similar, and nearly identical, amounts of tax. The government can borrow from individual institutions, banks etc. Above all, the most fundamental characteristic of a good tax system is the appreciation of the rights and problems of the tax payer. Built-in-flexibility attained through progressive taxation ensures that when incomes are increasing during the period of boom or inflation, the relatively greater amount of tax revenue accruing to Government will moderate the increase in purchasing power with the people and aggregate demand and thus help in keeping prices under check. Tax payment is a personal obligation.
An excessive dose of deficit financing is bound to raise prices which are harmful for the society. In a federation the central government provides grants to state governments, usually in the performance of a specified function. If they are working on a project, then I think whenever they have some extra time, they should work on their project so that they get it done faster. Transparency means that taxpayers and leaders can easily find information about the tax system and how tax money is used. Ultimately, such a tax system has the potentiality of breeding corruption in the society. There mus be present individuals as well as organization who are willing to take rest in the Marketing goods as well as provide the necessary finds for such undertaking The information above is based on our lesson in Marketing21.
Controls must function harmoniously within these processes and should not bottleneck operations. This will serve to check decline in economic activity. Productivity or Fiscal Adequacy 2. The fact that tax is a contribution implies the notion of a sacrifice involved on the part of the contributor. Not only taxpayers should know when, where and how much taxes are to be paid. It is the duty of the state to guarantee distribution of the estates of deceased persons to heirs specified in wills, or to persons declared to be lawful heirs by courts, if no such heirs exist, the property reverts to the state.
Canon of Productivity: According to a well-known classical economist in the field of public finance, Charles F. Hence a license fee is paid in those instances in which the government authority involved; simply confer permission or a privilege to a particular person. The philosophy behind progressive taxes is that higher income people can afford and should be expected to provide a bigger share of public services than those who are less able to pay. Note: Equity is best measured by considering a range of taxes paid, not by looking just at a single tax. Example: Height tax is unfair. For example, violation of traffic rules, payment of income tax after the stipulated time etc.
