18 Questions
What is one of the goals of using tax policies?
To reduce inequality of income distribution
What is the principle of taxation that ensures fairness in the distribution of the tax burden?
Equity
What is the principle of taxation that requires the greatest beneficiaries to pay the highest tax contribution?
Benefit principle
What is the principle of taxation that is categorized into horizontal equity and vertical equity?
Ability to pay principle
What is the purpose of the principles of taxation?
To design and implement a tax system
How many principles of taxation are mentioned in the text?
9
What is the primary goal of the 'ability to pay' principle in taxation?
To ensure that people with higher incomes pay more taxes
What is the advantage of collecting taxes at a time when taxpayers have sufficient money or income?
It encourages voluntary compliance
What is the primary reason for implementing simple taxation?
To achieve an economy in tax collection
What is the principle of horizontal equity in taxation?
Treating people with similar income levels similarly
What is the main objective of vertical equity in taxation?
To tax higher-income individuals more progressively
What is the primary characteristic of an efficient tax?
The cost of collecting the tax is lower than the revenue collected
What is the consequence of uncertainty in taxation?
Tax evasion
What is the primary goal of the broad base principle in taxation?
To include various sectors of society and the population, thereby reducing the individual tax burden
What is the primary advantage of deducting tax from salary at source?
It makes it easier for taxpayers to pay their taxes
What is the main concern of economies in taxation?
Minimum administrative cost
What is the principle of certainty in taxation?
Tax laws should be clear and plain
What is the result of complicated tax laws?
High administrative cost
Study Notes
Horizontal and Vertical Equity
- Horizontal equity: similar treatment for people in identical situations, e.g., same tax for same income level
- Vertical equity: different tax burdens for people in different circumstances and income levels, where higher-income individuals pay more taxes
Principles of Taxation
- Equity: fair distribution of tax burden among citizens, with equal burden among those with similar economic circumstances
- Certainty: clear and specific tax liability, with set times and methods of payment
- Economy: inexpensive tax collection, minimizing administrative costs
- Convenience and voluntary compliance: taxation that is easy for taxpayers, encouraging voluntary compliance
- Progressivity: taxation proportional to income and ability to pay, with higher-income individuals paying more taxes
- Efficiency: tax collection cost lower than revenue collected
- Adequacy: taxation sufficient to cover expected government expenditure
- Broad base: inclusive tax system that reduces individual tax burden
- Simplicity: easy and understandable taxation process
Learn about the principles guiding the design and implementation of a tax system, including equity, certainty, economy, and convenience. Understand how taxation can reduce income inequality and promote resource distribution.
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