Tag: Taxation

The Merits and Demerits of Direct Taxes (explained with diagram)

A controversial issue in public finance is concerned with whether in tax structure of an economy direct or indirect taxes should be preferred. Indeed, both direct taxes and indirect taxes have their merits and demerits and therefore a good tax system should contain a proper mix of these two types of taxes. Direct taxes, …...

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The Principle of Equity in Taxation – Explained!

The Principle of Equity in Taxation ! An important question widely discussed in public finance is what kind of tax system is fair, just or equitable. As seen above, equity in taxation was the first canon of taxation on which Adam Smith laid a good deal of stress. A fair tax system is not …...

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The Principle of Equity in Taxation – Explained!

The Principle of Equity in Taxation ! An important question widely discussed in public finance is what kind of tax system is fair, just or equitable. As seen above, equity in taxation was the first canon of taxation on which Adam Smith laid a good deal of stress. A fair tax system is not …...

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Top 4 Principles or Canons of a Good Tax System

Some of the most important principles or canons of a good tax system are as follows: 1. Principle or Canon of Equality 2. Canon of Certainty 3. Canon of Convenience 4. Canon of Economy. A good tax system must fulfill certain principles if it is to raise adequate revenue and fulfill certain social objectives. …...

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Well- known Methods of Correcting in Adverse Balance of Payment

There are four well-known methods of correcting in adverse balance of payments: 1. Trade Policy Measures: Expanding, Exports and Restraining Imports: Trade policy measures to improve the balance of payments refer to the measures adopted to promote exports and reduce imports. Exports may be encouraged by reducing or abolishing export duties and lowering the …...

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What is Tax: Meaning and Classification of Tax – Explained!

What is Tax: Meaning and Classification of Tax –Explained! Government Budget Constraint: The Government has to finance its expenditure including interest payments on accumulated public debt by using taxation, borrowing from the market (i.e. sale of new bonds) and use of printed money. Government’s budget constraint equation can be written as: G = …...

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Incidence of Taxation: Meaning, Shifting the Burden of a Tax and other Details

Some of the main incidence of taxation are as follows:  Meaning of Incidence: It is important to study who ultimately bears the burden of a tax. The incidence of taxation refers to this question of who and in what proportion bears the final burden of a tax. It is not necessary that a person …...

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Six Principles or Characteristics of a Good Tax System

Some of the most important principles or characteristics of a good tax system are as follows: 1. Productivity or Fiscal Adequacy 2. Elasticity of Taxation 3. Diversity 4. Taxation as in Instrument of Economic Growth 5. Taxation as an Instrument for Improving Income Distribution 6. Taxation for Ensuring Economic Stability. Adam Smith viewed the …...

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Taxation and Mobilization of Resources for Economic Growth

Taxation and Mobilization of Resources for Economic Growth! Taxation is an important instrument for fiscal policy which can be used for mobilizing re­sources for capital formation in the public sector. To raise ratio of savings to national income and thereby raise resources for development, it is necessary that marginal saving rate be kept higher …...

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Taxation Process in Different Countries: Aims, Types and Nature

Taxation Process in Different Countries: Aims, Types and Nature! Aims of Taxation: Most people think that taxes are used to raise revenue for government expenditure. This is, indeed, a key aim of taxation but there are other aims as well, including: i. Redistribution of income from the rich to the poor. Higher income …...

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