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Friday, December 15, 2017

Principles of Taxation

Credit: Eminenture
principal of texation

There are some principles involved before deciding taxation system for a country or city, and the principles are based on economy, equity and so much more.

Taxation system has been running from centuries, it’s how Governments gains revenue to its budget. One thing that is common about taxation all over the world is the fact that few people really see the usefulness of it and feel as if they their taxes haven’t been put to better use. Many people love to put the title of taxpayer on themselves, when in fact they are very resentful when it comes to paying the taxes to the taxman.

In determining the strength of the international taxation system, you need to evaluate the various principles of taxation and then weigh the current tax regime against the generally agreed principles of taxation. In this article, we are going to take some time so that we can look at the various principles of taxation, and then you can go ahead and test whether your tax regime suits your need.

Economy

The first thing that you ought to know about any taxation regime is the fact that a good tax regime must be one that is economical. It is important to take note of the fact that if at all a tax regime must be a good one, and then it is important that it be economical. This means that the cost of collecting the taxes must be such that they do not prohibit the implementation of the tax policies and laws. This is an extremely important thing so that every government must take into consideration because it can easily mean that you find it impossible to put down the very laws that you have laid down.

Equity

The other principle that you need to take into account is the principle of Equity. This does not mean that all the people should pay equal amounts of taxes, but people actually pay taxes according to their abilities and income. Although this principle is generally agreed upon, there is great contention on what this really means. Some systems interpret this to mean that the income must be taxed at a fixed rate. On the other hand, there are other schools of thoughts is that the progressive tax rates is the best because it ensures that the poorer a person is, the lesser the pinch will he feel.

All in all, it is extremely important to take note of the fact that no two economies are the same. You will come to realize that different economies have got different requirements. For this reason, you will find that while one economy may want to focus on the costs, another one may want to focus on the equity.

Benefit Principle

It is the principle of taxation according to which government spending should be met by the people who receive them. They help determine what activities the government will undertake and who will pay for them. If this principle could be implemented, the allocation of resources through the public sector would respond directly to consumer wishes.



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AdelaBell is a writer for BrooWaha. For more information, visit the writer's website.
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