Purpose and importance of taxation

Preparation of income tax return of an individual 1. There are various instruments for taxing agriculture, including taxes on land area, on land value, on net income and on land transfer. Blum under our federal income tax many of the substantive rules for classifying actions have long appeared to call for an inquiry into somebodys state of mind. Tax season is upon us, and understanding how taxes work and can affect you is a significant part of being a tax payer. Taxation systems are usually modeled in such a way that they take into consideration the social welfare of the citizens.

Taxes play crucial roles in helping in the development of various governments sponsored projects for better performance. Tax evasion double taxation means 1 taxing twice 2 by the same taxing authority 3 with the same jurisdiction 4for the same purpose 5 in the same year. Encyclopaedia britannica indicates that the primary purpose of taxation is to allow a government to allocate resources as necessary. Taxes are levied in almost every country of the world, primarily to raise revenue for government expenditures, although they serve other purposes as well. This includes financing government and public projects as well as making the business environment i. For a country like india,we are usually adopting deficit budget,we have to find additional fund every year. Vat, esc, tt and nbt function and purpose of taxation in a modern economy economic factors government taxation represent a withdrawal from sri lankan economy. Importance of accounting since i just told you what the purpose of accounting was, lets talk about why its important. Since taxation is a state institution, its purpose of the public interest need not be included in the definition of taxation.

The revenue is required to pay for the goods and services which the government provides. Definition of taxation it is the process by which the sovereign, through its lawmaking body, raises revenues used to defray expenses of government it is a way of the government in increasing its revenue under the authority of the law, purposely used to promote welfare and protection of its citizenry it is. The main purpose of taxation is to provide the government with the funds needed to deliver public 1100 words 5 pages. According to various economists, there are four major purposes of taxation that are redistribution, revenue, representation and repricing. The government came up with the body of kenya revenue authority to collect taxes from its people. Taxation, imposition of compulsory levies on individuals or entities by governments.

Taxes support national defense programs, roadway construction, social service programs, public health and education. Findings from this study show that high tax countries have been more successful in achieving their social objectives than low tax countries. The predominant importance of agriculture in developing countries makes agricultural taxation a potentially significant source of tax revenue and a means of transferring resources into productive investment. Ratios help in analyzing the performance trends over a long period of time. Please check your internet connection or reload this page. Without taxes, government contributions to the health sector would be impossible. The objective of excise taxation is to place the burden of paying the tax on the consumer. The impact of taxation as an aid to economic development includes abstract and chapter one, complete project material available the impact of taxation as an aid to economic development in edo statea case study of oredo local government area, edo state, nigeriaproposalthe research work will discuss in detail the impact of taxation as an aid to. Raising government revenue in terms of income tax, custom duty, excise duty, entertainment tax, vat, land revenue tax etc. Although they need to be reinterpreted from time to time, these principles retain remarkable relevance. While the federal income tax rules are now more complicated than ever, the benefits of good tax planning are arguably more valuable than ever before.

Without taxes, governments would be unable to meet the demands of their societies. The main purpose of taxation is to provide the government with the funds needed to deliver public services, reduce poverty in society, and to invest in country development and security systems, imf, oecd, world bank, 2011. Explaining the primary purpose of taxation economics essay. Taxation refers to compulsory or coercive money collection by a levying authority, usually a government. Learn by example and become a better writer with kibins suite of essay help services. Most governmental activities must be financed by taxation. Do you remember being a child, and it seemed that as soon as you were given. To redistribute wealth from the rich to the poor see. Revenue, redistribution, repricing, and representation.

Truly speaking, in the modern world, taxation is used as an instrument of economic policy. Follow report by army89582 31 minutes ago log in to add a comment. Functions or purposes of taxation, managerial economics. Motive, intent, and purpose in federal income taxation walter j. Taxation has become the core of various financing decisions which includes international investment decisions, international working capital decisions, fund raising decisions and the decisions related to dividend and other payments. A recent mistake at harvard has left many of its employees owing the irs thousands of dollars in taxes.

All governments in the world cannot run its administrative office without funds and it has no such system incorporated in itself. Hey, governments impose charges on their citizens and businesses as a means of raising revenue, which is then used to meet their budgetary demands. A tax is a compulsory financial charge or some other type of levy imposed upon a taxpayer an individual or legal entity by a governmental organization in order to fund government spending and various public expenditures. Only people who purchase gasoline who use the highways pay the tax. The primary purpose of taxation is to raise revenue to meet huge public expenditure. Taxes are crucial because governments collect this money and use it to finance social projects. Browse essays about importance of taxes and find inspiration. They have found that 64% of the non business respondents wish to learn about tax. A countrys tax system is one of the determinants of other macroeconomic indices such. Tax treaties are effectively an incentive offered only to investors from a particular country. Taxation is a form of initiation of force, which is immoral, destructive, and unacceptable whether perpetrated by an individual, mafia, or government. Also referred to as social engineering, the purpose of this is to discourage people from antisocial behavior and is often done heavily taxing the commodity.

They also help a business to compare the financial results to those of competitors. Financial ratio and its analysis purpose importance. The main purpose of taxation is for the government to build new things for the community. Several reasons make it important for taxation to be conducted in the country. In other words, taxation policy has some nonrevenue objectives. The bottom line is that taxation should foster equal distribution of resources. Each of the functions fulfilled by the taxation instrument is a manifestation of an internal feature, an indicator or trait or this economic category. A failure to pay, along with evasion of or resistance to taxation, is punishable by law. The functions of taxation can be discussed from the activities of the government it is meant to achieve. Taxes are the materials of government revenue, this is used for government centers. Taxation is important for an economy for raising fund for meeting the public expenditure. Apart from avoiding double taxation, why do countries sign them. Title the purposes and substance of taxation kambe.

The three goals of taxation had made its way into the legal literature. The concept of taxation is also important to businesses because governments can fund this money back into the economy in the form of loans or other funding forms. Motive, intent, and purpose in federal income taxation. The government and other policy makers have the responsibility of ensuring that the system takes into account the needs of the citizens. The functions of taxation illustrate its social purpose of the valuebased distribution and redistribution of income. Taxation is a means by which governments finance their expenditure by imposing charges on citizens and corporate entities.

But your tax money isnt just going toward fancy shindigs at the white house although, to be. Basic tax principles, personal taxation, tax planning for individuals and taxation for small business and company are the topics of interest for respondents. The 18thcentury economist and philosopher adam smith attempted to systematize the rules that should govern a rational system of taxation. However, it is not desirable to exclude purposes from the definition of taxation, especially when such a purpose is characteristic of taxation. Prices affect virtually all measures of cigarette use, including percapita consumption, smoking rates and the number of cigarettes smoked daily. The macanese tax system is, of course, of the utmost importance for that purpose. Taxes help raise the standard of living in a country. Typically governments use tax money to support expenses related to building and technology infrastructure, military programs, public safety, environmental protection and. A good example of this use of excise taxes is the gasoline excise tax. Taxation is used by the government to raise revenues for its operations, infrastructure, welfare, education defense carnell, 2010. The higher the standard of living, the stronger and higher the level of consumption most likely is.

The term taxation applies to all types of involuntary levies, from income to capital. They also point out the problem and weak areas along with the strength areas. Governments use the revenue from this tax to build and maintain highways, bridges, and mass transit systems. Role of taxation in financing economic development economics. For the worldwide operation of firms, taxation plays a vital role. Some very important instruments that a tax system may use are the tax treaties for the avoidance of double taxation dtts double tax treaties. What are the importance of tax tax is a major source of government revenue and its contributes for the overall development and prosperity of a country.

Bahari and ling 2007 conducted a research that aimed to seek the importance of tax education. What do you think is the purpose and importance of taxation. The irs indicates that taxes are vital to support the infrastructure that citizens rely on at the local, state and federal levels. Findings from this study show that hightax countries have been more successful in achieving their social objectives than lowtax countries. In the wealth of nations book v, chapter 2 he set down four general canons. The main purpose of our government in imposing taxes is to raise fund enable for them to work, because taxation is the strongest power of the government and therefore, it is highly needed by them. The other main function of tax treaties, especially from the perspective of developing countries, is about tax competition. In its strict sense, it is also referred to as obnoxious or direct duplicate taxation or direct double taxation. Function and purpose of taxation in a modern economy. Taxes consist of direct or indirect taxes and may be paid in money or as its labour.