In the Indian tax system, however, this attribute is lacking to some extent. For this purpose, a proper blending of direct and indirect taxes in the taxation system, is necessary. From equity point of view, the Indian tax system has predominance of indirect taxes that reflects the inequitable nature of this system.
As such, the tax system of one country differs from that of another, depending on the institutional and historical differences.
Thus, an overall progressive tax system is an important factor in ensuring economic stability. It should effectively balance the weight and burden of taxation.
Important Characteristics of a Good Tax System! That is to say, the taxes imposed should be more or less equitable, convenient to pay, economical, certain, productive, flexible and simple as far as possible.
Principle or Canon of Equality: A Good Tax System of a country should be such as to provide adequate elasticity in the tax system. For example, imposition of a protective duty and a -countervailing excise duty do not go well together.
It may be noted that Adam Smith was basically concerned with how the wealth of nations or, in other words, production capacity of the economy can be increased and he thought that private enterprise working on the basis of free market mechanism would ensure efficient use of resources and, if left unfettered would bring about rapid economic growth.
Now, in most of the countries, progressive system of income and other direct taxes have been adopted to ensure equality in the tax system.
Its burden should fall on the broadest shoulders. 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.
The state cannot raise sufficient revenue and, at the same time, please the tax payers. The tax system should be so as to yield more income when the government expenditure goes up at a time of emergency or crisis. In other words, what various tax rates should be levied on people with different levels of income, A good tax system must be such as will ensure the horizontal as well as vertical equity.
Similarly, it should have a balance of direct and indirect taxes. As a result, there is a lot of harassment of the tax payers and corruption is rampant in the income tax department.
Various factors have to be considered in determining the tax system of a country. It should be simple to administer.
The weight refers to absolute sacrifice, in terms of purchasing power of real income surrendered by the tax-payer. The Government should see that the tax payer is not put to any avoidable hardship in making the payment of tax.
The tax system should be multiple, but then took a great multiplicity is not desirable. The capacity to adjust itself to the dynamic conditions of an economy is a virtue of a good tax system. In the developing country, taxes have to serve as a means of curbing consumption and tapping the resources for development.
The Government while devising the tax system of the country, should take into consideration the convenience of the sacrifice. It should be so balanced that every citizen should contribute to the exchequer.
The entire structure of the tax system should have built-in flexibility, so that changes are possible according to the changing conditions of a dynamic economy. It will produce more revenue to the Government and the maximum benefit to the society. For instance, income tax is not universal in India, as no income tax is levied on agricultural incomes.
The tax system should be based on comprehensive and up-to-date statistical information, so that accurate forecasting is made possible. A good tax system is that which cares for the convenience of the tax payer.
This will reduce the scope for tax evasion to the minimum. The time of payment, the manner of payment, the quantity to be paid ought all to be clear and plain to the contributor and to every other person.ADVERTISEMENTS: Important Characteristics of a Good Tax System!
To judge the merits of a tax system, it must be looked at as a whole. For, a tax system to be a good one just cannot have all good taxes but none bad at all.
The state cannot raise sufficient revenue and, at the same time, [ ]. Static Main Menu. Home; Share Your Files; Account Disabled; Return to Content.
Top 4 Principles or Canons of a Good Tax System. Article shared by: ADVERTISEMENTS: Some of the most important principles or canons of a good tax system are as follows: 1. the modern economists have added other principles or characteristics which taxation.
The four main desirable characteristics of taxation system were first introduced by the economist Adam Smith, who concentrated on how to design an effective tax system.
In his book Wealth of Nations published inhe described four desirable characteristics (Equity, Certainty, Convenience and Efficiency) for a tax system. The The four main desirable characteristics of taxation systems is one of the most popular assignments among students' documents. If you are stuck with writing or missing ideas, scroll down and find inspiration in the best samples.
The four main desirable characteristics of taxation systems is quite a rare and popular topic for writing an. Characteristics of a Good Tax System. Article Shared by. ADVERTISEMENTS: 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.
From the point of view of administrative efficiency, all loopholes for evasion should be plugged. Characteristics of an Effective Tax System A good tax system should meet five basic conditions: fairness, adequacy, simplicity, transparency, and administrative ease. Although opinions about what makes a good tax system will vary, there is general consensus that these five basic conditions should be maximized to the greatest extent.Download