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Society
Taxation is important to society because the government use the tax collected to
fund projects related to health care systems, education systems, and public
transports. Also, the money collected can also be used to give unemployment
benefits, pensions, and other matters that can benefit the society as a whole.
Without tax, the government would not be able to fund the essential projects and
services that people need.
The government allocates the money collected from the taxpayers to different
areas of the country. The areas picked are rural areas. Some rural areas may
have resources that might be beneficial for both the country and its economy.
Therefore, the government would allocate part of the tax money to provide the
essential services required and to improve the standards of such places.
Other important role taxation has is it can affect the rate of economic growth of a
country. Although taxation may discourage investors from investing in a country
with a strict tax rules, however, a recent study made by Prof. Myles, suggests
both the positive and negatives affects of tax would be offset, and thus, only a
very small result would be noticed. In his study, he discovered in developing
countries, tax contributes to almost 10% of the gross domestic product of the
economy. Thus, resulting in an economic growth.
Businesses
The concept of taxation is vital to businesses in the economy, as the amount of
tax taken from each business is accumulated, one of the ways that tax is used to
help business is through the government funding the money back into the
economy as long term loans and/or funding. The money could also be pumped
back into the economy by the government in the event of an economic recession
or turmoil.
Another benefit of taxation to the society, Is that it helps develop the country as a
whole, and the more developed the country is; would therefore mean better
prospects for the business's as it increases the well being of the country's
society.
For the worldwide operation of firms, taxation plays a vital role. Taxation
has become the core of various financing decisions which includes
internationalinvestment decisions, international working capital decisions,
fund raising decisions and the decisions related to dividend and other
payments. The tax decision is also relevant in domestic firms also.
What is taxation? Why is taxation 1 800 new loan so important in a particular nation or
state? What makes it a very significant aspect of governance?
Cooley defines taxation as the process or means 02116 cash advance by which the
sovereign, through its law-making body, raises income to defray the necessary expenses
of government. Expressed in another way, it is a 1 800 numbers for payday
loans method of apportioning the cost of government among those who in some
measure are privileged to enjoy its benefits and must, therefore, bear its burdens.
Malcolm explains that taxation is the power vested in the legislature to impose burdens
or charges upon persons and property for the purpose of raising revenue for public
purposes.
The nature of the states power to tax is two-fold. It is both an inherent power and a
legislative power. It is inherent in nature being an attribute of sovereignty. It has been
argued that it is literally impossible for the state to run its affairs without taxes. Its
existence and operations are dependent primarily from the revenues and charges
imposed from various sources. It is a legislative power because it involves promulgation
and implementation of rules. Taxation is a set of rules, how much is the tax to be paid,
who pays the tax to whom and when it should be paid.
Government financial operations are well-nigh impossible without taxation. Apart from
this, taxation can be a powerful means in order to achieve the golas of social progress
and the objectives of economic development. It serves as a device to encourage the
growth certain activities by way of giving exemptions, discourage use of certain products
by way of imposing heavier charges like those sin taxes which are imposed upon tobacco
products, or strengthen anaemic enterprises, also by way of tax exemptions. Local
industries may be protected through taxation by imposing high customs duties to
foreign goods. Moreover, taxation can also be used to reduce inequities or inequalities in
wealth and income by progressively higher taxes as in the case of estate and income tax.
So based on the foregoing premises, it is clear that taxation is indeed the lifeblood of the
state, without which the existence of the state will be put to jeopardy.
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Taxes are mainly used to finance the expenses incurred by government to manage
an economy. These expenses include: health care, education, garbage collection
and operating government business entities. Taxation is also used by government
for several other purposes.
a. To reduce pollution by taxing offending firms
b. To discourage unhealthy lifestyle e.g. a tax on cigarettes
c. To protect local and infant industries by taxing imports
d. To achieve greater equality of wealth and income. Revenue from taxation is
used to help the very poor e.g. providing food stamps.
e. To improve the balance of payments (BOP) by increasing the duties charged on
imported goods.
f. To control spending in an economy thus reduce inflation
7. Control mechanism:
Tax policy is also used as a control mechanism to check inflation, consumption of
liquor and luxury goods and to protect the local poor industries from the uneven
competition. Taxation is the only effective weapon by which private consumption
can be curbed and thus resources transferred to the state. Thus the economy
can ensure sustainable development.
Thus it can be said that the economic development of a country depends various
reasons one of them are on the presence of an effective and efficient taxation
policy.