![]() ![]() They are Ĭlarity in the administration of tax laws means that all tax rules and regulations must not be vague, ambiguous or obscure to taxpayers. Typically, for the administration of tax laws to be effective and efficient, there are four major requirements needed. Developing or emerging countries need to consider an effective and efficient tax administration strategies which will also enhance good administration and compliance in the country. This will aid the ease of administration and also enhance compliance to tax systems. The administration of the tax industry as well as compliance to taxes must be overseen by an accountable and trustworthy authority. Excess burden is also created in the economy when there is an unnecessary intervention from the tax system. This is due to the fact that economic decision making and processes are distorted by the Interference of taxation. Hence, economists maintain that taxation should not interfere with means of production, production expenditures and consumption. Economic decisions relating to production, consumption and allocation of resources is done by the market or by market factors and this should not be interfered with by the tax system. Economic EfficiencyĮconomists maintain that the efficiency of a tax system depends on the nature of market economy operating at a particular time. However, the benefit principle is affected when road users are required to pay toll fee or highway levies. Given the above factors, implementing the benefit principle will be a complex task. ![]() In fact, in some countries, if citizens are required to pay more taxes for the public services they enjoy, some citizens would prefer to be cut off or excluded from such services. Aside from the fact that the provision of social amenities is what citizens should enjoy, citizens lack the urge or natural tendencies to pay for these services. In a typical country arrangement, citizens do not see the need to pay for public services or projects funded by the government. Implementation of this principle would mean that resources allocated for public projects will be based on the response of consumers in terms of payment of taxes.īack to: Accounting & Taxation How Does the Benefit Principle Work? The benefit principle is sometimes compared to prices paid in private transactions because they serve similar purposes. Hence, individuals who are direct consumers of services provided through public financing are expected to pay more taxes than other people. This principle is one that outlines what government expenditure should be tailored at and those that should pay for them. In taxation, the benefit principle is a principle based on the notion that those who benefit more from government expenditure or spending should pay more taxes that those that do not. Update Table of Contents What is the Benefit Principle? How Does the Benefit Principle Work? Economic Efficiency Compliance Academic Research on Benefit Principle What is the Benefit Principle?
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