Characteristic/features of a good tax system
- Affordability. A good tax system should be affordable by the tax payer.
- Equity/fairness. A good tax system aims at equitable distribution of income through the proportional and progressive tax
- Certainty. The tax payer should be certain of exact amount imposed on him.
- Convenience. The collection of tax should be timely with few administrative problems.
- Diversity. The tax system should allow various types of tax according to different taxable capacities.
- Economical i.e. the cost of collection need not exceed 5% of the expected total revenue.
- Simplicity. Taxes should be administered in simple and understandable languages to avoid misinterpretations from the payer and collector.
- Productivity. The tax system should balance between the amount of revenue collected and at the same time avoid adverse effects on productive potential of economy.
- Elasticity or flexibility. The government should be able to raise or reduce revenue as needed
- Comprehensiveness. A good system should have a wide variety of taxes to exploit the potential tax base
- Optimality. The tax system should balance between the amount revenue collected and the services rendered from the collected tax revenue
- Stabilization and allocation of resources. Taxations should aim at stabilizing economic structure e.g. increasing tax to curb inflation
- Harmony. The tax imposed should not create conflict between the tax payer and tax authority for instance It should minimize double taxation.
CATEGORIES Economics
TAGS Dr. Bbosa Science
