The importance/roles/benefits of taxation to a country
- It helps in raising government revenue through direct and indirect taxes. This revenue helps the government to build infrastructures such as roads, hospitals and schools
- It helps in income distribution. This is done by mainly progressive tax system as well as using revenue raised to help poor
- It is a means of regulating and controlling monopoly power. This done by a way of taxing monopolies more than and using the revenue to finance or subsidize other weak starting projects
- Helps in protecting local producer and local infant industries by taxing heavily imports of similar products to the locally produced ones
- It helps in controlling the rate of inflation. This done by increasing the tax rates to reduce the amount of money in circulation
- It helps in allocation and regulation in scarce resources. This by way of taxing those with many resources and trying to develop one with fewer resources
- It insists in controlling production and consumption of undesirable goods by raising taxes to such goods.
- It helps in regulating the balance of payment position. This done by away of increasing import duties to reduce the volume of imports thereby reducing the total import expenditure
- It helps in boosting the levels of investments inn economy. This done by way of relaxing taxes on investors as well as taxes on raw materials and intermediate products
- It helps in strengthening trade relations especially in case of economic integration, member states are given tax concession and proves their economic and political relationship
- Taxes also help to protect people’s health and consequently raise their life expectancy by levying duties on harmful consumptions of goods such as alcohol and cigarette.
- It discourages the production and importation of some goods especially luxury products that are not priority among the majority
CATEGORIES Economics
TAGS Dr. Bbosa Science
