Taxation Advice System

Taxation Advice System

It is important for the government to put certain principles into consideration while setting up taxation systems so that they can be in a position to serve their people well. There are many principles or taxation advice of taxation that have been developed from years, but all over the world there are four principles that are known to many economists.

Efficiency Principle This main principle of taxation is one which state that the totals cost of collecting taxes should not be too much that leads in making the taxation system. The discussed costs can be divided into the administrative costs and the compliance costs. The Administrative costs generally aims at making sure that the government plays its role, such as employing of the tax officials, the cost of printing forms, and so on. On the other side, the compliance costs are those that is incurred by the taxpayer in a bid to ensure that the taxes are paid.

Equity Principle Equity is the second most important principle of taxation. This principle stipulates that the taxation advice system should be in a manner in which the wealth is redistributed to the poor from the rich, so that people can pay taxes according to their abilities. This principle is something that in many countries has brought about the progressive type of taxation system.

Flexibility Principle Flexibility is the third principle of taxation. A tax system needs to be quite flexible than rigid so that if there are any type of changes occurring in the economy that might lead to change in the tax laws, it would become quite easy to do changes. It becomes difficult to run a tax system where you find difficulty in making changes to legislation.

Certainty Principle Certainty is the last principle of taxation that we shall be looking at. A good taxation system needs to be firm so that one can easily predict how the situation will be in coming few years. The taxation advice system should not be fluid despite the fact that it should be flexible to allow changes. This is very much necessary as it creates a sense of stability especially to the investors.

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