ECN 002—6-4-2021 (Online Discussion Quiz 2—-Taxation 1)
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Dr Anthony Orji
Senior Lecturer, Economics, UNN
Dr Anthony Orji is a Ph.D holder in Economics and a lecturer at the Department of Economics, University of Nigeria Nsukka.
He obtained his B.Sc, Msc and Ph.D Degrees from the University of Nigeria, Nsukka and a Post Graduate Diploma in Sustainable Local Economic Development (SLED) from Erasmus University, Rotterdam Netherlands.
TAXES:Taxes are involuntary bills levied on individuals or corporations and enforced by a government entity-whether local, regional or national_inorder to finance government activities.In economics taxes fall on whoever pays the burden of the tax, whether this is the entity being taxed,such as a business,or the end consumers of the business goods. There are several many common types of taxes: 1.Income tax:A percentage of individual earnings filed to the federal government. 2.Corporate tax:A percentage of corporate profit taken as tax by the government to fund federal programs.
3.Sales tax: Taxes levied on certain goods and services.
4.Property tax: Based on the value of land and property assets.
5.Tariff:Taxes on imported goods imposed in the aim of strengthening internal businesses.
6.Estate tax:Rate applied to the fair market value of property in a person’s estate at the time of death.
The government impose taxes to help fund public works and services_and to build and maintain the infrastructures used in a country_the government usually taxes it’s individual and corporate residents.The tax collected is used for the betterment of the economy and all living in it.
WHY GOVERNMENT IMPOSE TAX ON THEIR CITIZENS?
1.SOURCE OF REVENUE:The government uses fund raised through taxes to pay for services such as; health, education, infrastructure, security,and other social amenities.
2.CREATION OF EMPLOYMENT:Taxes are imposed on certain products to discourage their importation and protect the local industries that employ local citizens.
3.Protect citizens : Taxes are imposed on certain products to stop international manufacturers from dumping sub-standard and harmful product in the country.
4.TO IMPROVE ON CITIZENS LIVING STANDARD: The government uses taxation as a social political.Tax maybe adjusted to encourage growth on certain sectors of the economy that have direct effect on the citizens.For example transport sector when the government removed taxes on motorcycle import and license fee to improve communication in the rural area.
5.The government uses taxation as a fiscal policy.A good example is tax regulation aimed at spurring production and aspect in order to control the balance of payment regime.
Since government uses the tax imposed for the smooth running of the country’s economy and for the betterment of the citizens,it said that from this perspective that government imposed tax on its citizens is justifiable from the reasons above.
Taxation is the means by which a government or the taxing authority imposes or levies a tax on its citizens and business entities. From income tax to goods and services tax (GST), taxation applies to all levels.
What is Taxation?
The Central and State government plays a significant role in determining the taxes in India. To streamline the process of taxation and ensure transparency in the country, the state and central governments have undertaken various policy reforms over the last few years. One such change was the Goods and Services Tax (GST) which eased the tax regime on the sale and deliverance of goods and services in the country.
The tax structure can be classified into two main categories:
Direct Tax
Indirect Tax
Direct Tax: It is defined as the tax imposed directly on a taxpayer and is required to be paid to the government. Also, an individual cannot pass or assign another person to pay the taxes on his behalf.
Some of the direct taxes imposed on an Indian taxpayer are:
Income tax- it is the tax applicable on the income earned by an individual or taxpayer.
Corporate tax- this is the tax applicable on the profits earned by companies from their businesses.
Indirect Tax:It is defined as the tax levied not on the income, profit or revenue but the goods and services rendered by the taxpayer. Unlike direct taxes, indirect taxes can be shifted from one individual to another. Earlier, the list of indirect taxes imposed on taxpayers included service tax, sales tax, value added tax (VAT), central excise duty and customs duty.
However, with the implementation of goods and services tax (GST) regime from 01 July 2017, it has replaced all forms of indirect tax imposed on goods and services by the state and central governments.
Taxation is a compulsory levy imposed by the government on individuals and firms as related to the consumption and production of goods and services.
Government impose taxes on citizens in order to fund the government’s revenue to finance the economy, it is used for the betterment of the economy as well as the citizens of the country the revenue will be further invested in projects (road, school, airports, seaports, refineries, etc. that are both beneficial to the rich and the poor.
Taxes can be used as a method to reduce Interest on import and and increase interest on export.
Taxes are imposed on citizens to archive greater equality in the distribution of wealth and income among the citizens. In a situation where there is inequality in income, aggregate demand falls hence government can introduce progressive tax system which will take more money from the rich and take less from the poor.
It is used to regulate inflation as well as deflation in the economy.
Government levy taxes on goods that are not socially desirable as a result of the dangers associated with it such as alcohol, cigarettes etc. This is done in order to reduce the consumption of these goods for the betterment of the citizens health.
The fact that government impose taxes on its citizens is justifiable from the reasons above.
In my intellectual concepts and ideology I agree with the reasons government impose taxes on the country’s citizens. The reasons why government impose taxes on the country’s citizens is to develop the economy of the country in many aspects such as infrastructure facilities and payment of salaries, etc. So, since the reasons why government impose taxes are beneficial to the country it is viewed to be “Justified”.
First and foremost, “Taxation” can be defined as the act of imposing a compulsory levy by the government or it’s agencies on individuals, firms and on goods and services. “Tax” can be defined as the payment made by citizens to their government impose by the government which is compulsory. The government provide basic services such as; health, education, infrastructure and other social services which is meant for the general welfare of the citizens of the country. It is used to improves and develop the country’s economy to a better economy by improving it’s standard of living, wealth and other beneficial services amenities e.g electricity, school, etc.
Thee are numerous reasons why government impose taxes on the country’s citizens or corporate bodies, some of the reasons are:
(1) SOURCE OF REVENUE: The government uses funds raised through taxes as revenue which is usually used to pay for the services such as health, education defense, infrastructural facilities and other amenities.
(2) CREATION OF EMPLOYMENT: Taxes are imposed on certain products to discourage the importation of those products into the country and protect the local industries so as to employ local citizens to work in those provided industries.
(3) Protection of citizens: High taxes are imposed on some certain products to stop international from dumbing sub-standard and harmful product into the country in other to protect the citizens from consuming harmful products.
(4) To improve the standard of living of the citizens: Taxes may be adjusted to encourage the growth on certain sectors of the economy that have direct effect on citizens and it improves the standard living of the country’s economy.
(5) Taxation is used by the government as a fiscal policy.
(6) Taxation can be used as the retaliatory measure in international trade.
(7) Taxes imposed are usually used to raise revenue for government.
In summary, investments would give the people an opportunity to contribute enough taxes in the economy for economic development, progress and nation building. For this point of view it is really a justified case where government impose compulsory Taxes on the Citizens.
According to my intellectual concept and ideology I agree on the reasons why government impose tax on citizens. The reasons government impose taxes on the country’s citizens is for the development of the country in many aspects such as development of infrastructural facilities, payment of salaries, etc. So, since the reasons above are beneficial to the country it is viewed as “justified”.
First and foremost, “Taxation” can be defined as the act of imposing a compulsory levy by the government or it’s agency on individuals, firms and on goods and services. “Tax” can be defined as the payment made by the citizens to the government as levy. The government collect taxes from the citizens to provide basic services such as; health, education, infrastructural facilities and other social services which is meant for the general welfare of the citizens i•e it is for the general public. It is usually used to develop the economy of the country, wealth, etc.
There are numerous reasons why government impose taxes on citizens of he country, corporate bodies and enterprises but some major reasons are: (1) SOURCE OF REVENUE: the government uses funds raised through taxes as revenue of the country which is used to pay for some services such as health, education, infrastructure, security and other amenities.
(2) CREATION OF EMPLOYMENT: taxes are imposed on certain products to discourage their importation and protect the local industries so as to employ local citizens which are country’s citizens.
(3) PROTECTION OF CITIZENS: high taxes are imposed on some certain products to prevent international manufacturers from dumbing
sub-standard and harmful product into the country.
(4) TO IMPROVE THE CITIZENS STANDARD OF LIVING: tax may be adjusted to encourage growth on certain sectors of the economy that have direct effect on the citizens to improve the standard of living of the citizens.
(5) Taxation is used by the government as a fiscal policy tool.
(6) Taxation can be used as retaliatory measure in international trade.
(7) Taxes imposed are usually used to raise revenue for government.
In summary, investments will give the citizens an opportunity to contribute enough taxes for the economy for economic progress and nation building. The reasons government impose taxes are justified.
Taxation is the means by which a government or the taxing authority imposes or levies a tax on its citizens and business entities. From income tax to goods and services tax (GST), taxation applies to all levels.
What is Taxation?
The Central and State government plays a significant role in determining the taxes in India. To streamline the process of taxation and ensure transparency in the country, the state and central governments have undertaken various policy reforms over the last few years. One such change was the Goods and Services Tax (GST) which eased the tax regime on the sale and deliverance of goods and services in the country.The tax structure can be classified into two main categories:
Direct Tax
Indirect Tax
Direct Tax: It is defined as the tax imposed directly on a taxpayer and is required to be paid to the government. Also, an individual cannot pass or assign another person to pay the taxes on his behalf.
Some of the direct taxes imposed on an Indian taxpayer are:
Income tax- it is the tax applicable on the income earned by an individual or taxpayer.
Corporate tax- this is the tax applicable on the profits earned by companies from their businesses.
Indirect Tax:It is defined as the tax levied not on the income, profit or revenue but the goods and services rendered by the taxpayer. Unlike direct taxes, indirect taxes can be shifted from one individual to another. Earlier, the list of indirect taxes imposed on taxpayers included service tax, sales tax, value added tax (VAT), central excise duty and customs duty
Taxation is the means by which the government or the taxing authority imposes or levies a tax on its citizens and business entities from income tax to goods or services tax (GST), taxation applies to all levels .
CLASSIFICATION OF TAX
*DIRECT TAX :This tax are levied upon individuals or companies and vary with the status of the taxpayer in general direct taxes are levied on wealth or income .
*INDIRECT TAX :This tax are levied on a transaction and is paid by an individual by virtue of being involved in that transaction.
OBJECTIVES OF TAXATION
*Taxation leads to economic development of any country and thus results in growth of capital formation.
*Taxation is full of employment I.e, level of employment depends on effective demand.
CHARACTERISTICS OF TAX
1) Tax is a compulsory payment to be paid by citizens .
2) There is no direct quid-pro-quo between tax payers and public authority.
Hence ,it is rightfully justified that government imposing tax on citizens goes a very long way in the Society which is fostering economic growth and development, government need substainable source of finding for social programs and public investments .e.g, health , education, infrastructure, etc. Which all this mentioned here are the basic need of human wants .
First of all,A Tax is said to be a compulsory payment imposed by the government or her agencies,on individual s,firms,or on goods and services,which could be direct or indirect. From the word “compulsory payment imposed by the government” we can deduce the fact that their reasons are justified because the government itself is a mechinery established by the state(we the citizens) to organize the state,manage it’s affairs,administer it’s functions and duties which generating revenues through tax and expenditures on structural developments are included, with a vested power to maintain peace and security for a purpose and for the benefit of all.
According to Adams Smith,a good tax system should have the principles of; Equality, Economy,Certainty,Convenience, Flexibility. And with these principles,the taxes imposed on the citizens by the government can be justified with the reasons that they’re used to:
(1).To raise revenues for government expenditures.
(2). To distribute income or correct income inequality.
(3). To reduce or discourage the production and consumption of harmful products.
(4). According to Milton Freedman, taxation can be used to correct or regulate inflation or deflation in an economy (especially demand pull inflation)
(5). It is used to correct balance of payment defeceit when a country’s import is higher than export.
(6). It is used to protect infant industries from unhealthy competitions of older industries in business, with an instrument called “Tax holiday”.
(7). It is used for general administrative purposes
(8). For Social amenities, Defense purpose,To bridge or narrow the gap between the poor and the rich, etc.
One thing to note about tax is that it is not imposed as a penalty for any legal offence,it is also a general (i.e men and women) compulsory payment,and one must attain certain age before paying tax. With all these, I can attain that Government has a justified reason for imposing tax on its citizens.
• Purposes and Justifications for Taxation
The most basic need for taxation is to fund government expenditures. Varying justifications and explanations for taxes have been offered throughout history. Early taxes were used to support the ruling classes, raise armies, and build defenses. Often, the authority to tax stemmed from divine or supranational rights.
Later justifications have been offered across utilitarian, economic, or moral considerations. Proponents of progressive levels of taxation on high-income earners argue that taxes encourage a more equitable society. Higher taxes on specific products and services, such as tobacco or gasoline, have been justified as a deterrent to consumption. Advocates of public goods theory argue taxes may be necessary in cases in which the private provision of public goods is considered sub-optimal, such as with lighthouses or national defense.
Government imposes tax for the following purposes
i)SOURCE OF REVENUE; The government uses funds raised through taxes to pay for services such as Health, Education, Infrastructure, Security and other social amenities.
Illustrating further, when you work at a job to make money, you pay income taxes. … Tax money helps to ensure the roads you travel on are safe and well-maintained. Taxes fund public libraries and parks. Taxes are also used to fund many types of government programs that help the poor and less fortunate, as well as many schools.
ii)CREATION OF EMPLOYMENT; Taxes are imposed on certain products to discourage their importation and protect the local industries that employ the local citizens.
iii)PROTECT CITIZENS; Taxes are imposed on certain products to stop international manufacturers from dumping sub-standard and harmful products into the country.
iv)TO IMPROVE ON CITIZENS LIVING STANDARDS; The government uses taxation as a social political policy tool. Tax may be adjusted to encourage growth on certain sectors of the economy that have direct effect on the citizens. For example transport sector when the government remove taxes on motor cycle import and licenses fee to improve communications in the rural areas.
v)FISCAL POLICY TOOL; The government uses taxation as a fiscal policy tool . A good example is tax regulations aimed at spurring production and exports in order to control the balance of payment regime.
What is tax?
A tax is a compulsory financial charge or some other type of levy imposed on a tax payer by a governmental organization in order to fund government spending and various public expenditures.
There are various reasons why these taxes are imposed on the citizens which are ;
•Defense purpose:Taxation contributes part of the money used in maintaining a country’s armed forces ,which is one of the greatest benefits to the less privileged ,homeless and those in need enjoy without having to pay back .
•The Maintenance of law and order :For internal peace and stability of a county to be guaranteed , laws must be made and executed , which requires money.
•Government uses part of the money generated by taxation in providing social amenities for the citizens.
Indeed , paying of tax is a burden we all must live with ,however it is also pertinent to take into consideration that taxes imposed by the government play a crucial role towards the progress of the humanity .Therefore, it is justified that government has every right to impose tax on the citizens, if not none these functions will be performed in order to keep our nation function.
TAXES
First we need to understand what a tax is;
A TAX is a compulsory contribution to state revenue, levied by the government on workers’ income and business profits, or added to the cost of some goods, services, and transactions.
Reasons Why Government imposes tax on citizens;
– Defence Purposes;
Taxation contributes part of the money used in
maintaining a country’s armed forces.
– The Maintenance of Law and Order;
For internal peace and stability of a country to be
guaranteed, laws must be made and executed, which
require money.
– General Administrative Purposes;
The administrative machinery of a country may
collapse if there is no money to maintain it; tax
therefore forms one of the sources of such money.
– Provision of Social Amenities;
Governor uses part of the money generated by
taxation in providing social amenities such as hospitals, schools, road, water, and so on.
– For Protection of Infant Industries;
This is done by heavily taxing foreign-made goods in
order to discourage their importation and therefore encouraging the production of the infant industries by not taxing them for a certain period of years.
– As a Fiscal Device;
Tax is used to counter-act inflation and deflation.
– To Stop Importation of Harmful Goods;
Taxes imposed on such goods are high in order to
discourage their importation.
– To Correct Unfavourable Balance of Payments;
This is done by raising tariff to discourage the
importation and consumption of foreign-made goods
and lowering excise duties in order to encourage the
production and consumption of locally-made goods.
– To Encourage Industrialization;
This can be done by reducing or allowing industrialists
tax-free period for some time.
It would be important to note that there’s always two side to a coin, any thing that has an advantage also has a disadvantage but for a law to be implemented the advantages MUST be greater.
Therefore the reasons given above on why government imposes tax on citizens are justified mainly because;
– Without taxation , consumers Will be exploited.
– The government wouldn’t be able to provide adequate social amenities.
– There would be instability in the economy.
– It could lead to economic recession or even worse depression.
TAXATION
What is taxes?
Tax is a compulsory levy imposed by the government on individuals in business firms as it relates to income consumption and production of goods and services.
WHY GOVERNMENT LEVY TAXES
1. REVENUE GENERATION
It is used to create revenue (money)to finance government expenditures
2. PROMOTION OF ECONOMIC GROWTH AND DEVELOPMENT: As for this ,the government has to help developing companies and industries by granting tax holidays meaning e.g. allowance of 5 years no tax payment in order to generate enough profit in order to pay taxes properly.
3. FUNDING OF GOVERNMENT PROGRAMS;
Government provide services for their citizens who pay their taxes regularly. Some of this programs are police force ,health care building schools,.e.t.c.
4. GOVERNMENT DEBT PAYMENTS; The government Carry significant debts that paying back comes with an interest. Times like the economic recession or depression might come unexpectedly which demand the help of taxation to provide stability of the economy during this period.
CONTROL THE ECONOMY: It is used to regulate inflation and deflation of an economy.
A higher tax rate will reduce disposable income,hence aggregate demand,while a lower tax rate will increase disposable income thereby stipulating aggregate demand.
Now , these reasons are justified because
1.with out taxation , consumers Will be exploited.
2. The government wouldn’t be able to provide adequate social amenities.
3. There would be instability in the economy.
4. It could lead to economic recession or even worse depression.
It is justified because without revenue from taxes the government wouldn’t be able to provide the goods & service that we benefit and expect from the government .
All citizens must pay taxes, and by doing so contribute their fair share to the health of the government and national economy. It is also justified because the federal taxes u pay are used by the government to invest in technology and education, and to provide goods and services for the benefit of the people….
Taxation is an effective principle imposed by government to every sector of the economy which is levied for the generation of revenue and minimizing the negative effect of income on the economy.This principle prevent the relative spending of both the private individuals and economic activities.Taxation provides a fundamental source of income for running the government and providing public services such as constructing the necessary infrastructural facilities for adequate standard of living amongst citizens of the country.Taxation can also have important effect on economic development and growth and protection of infant industry within the country so as to exclude such establishment from paying tax for a period of time.
Taxation is the means by which a government or the taxing authority imposes or levies a tax on its citizens and business entities from income tax to Goods and Services Tax (GST), taxation applies to all levels.
Governments impose tax for the following purposes:
i) SOURCE OF REVENUE
The government uses funds raised through taxes to pay for services such as Health, Education, Infrastructure, Security and other social amenities.
ii) CREATION OF EMPLOYMENT
Taxes are imposed on certain products to discourage their importation and protect the local industries that employ the local citizens.
iii) PROTECT CITIZENS
Taxes are imposed on certain products to stop international manufacturers from dumping substandard and harmful products into the country.
iv) TO IMPROVE ON CITIZENS LIVING STANDARDS
The government uses taxation as a social political policy tool .
Tax may be adjusted to encourage growth on certain sectors of the economy that have direct effect on the citizens. For example transport sector when the government removed
taxes on motor cycle import and licenses fee to improve communications in the rural areas.
v) FISCAL POLICY TOOL
The government uses taxation as a fiscal policy tool. A good example is tax regulations aimed at spurring production and exports in order to control the balance of payment regime.
Based on the above reasons why government impose taxes, I think that their reasons for imposing taxes are being justified by me.
A very common and clear moral justification for a taxation system is that it is a function of the government to ensure that everyone’s basic needs are met. This can be seen as a response to fundamental human rights. These right imply universal secured access to basic goods such as food, water, housing and schooling.
The article focuses on the justification of taxation, in other words the principled rather than the technical aspect of taxation. We first show how, on the one hand, democracy is required for taxation to be legitimate, and how on the other hand democratic communities are dependent on taxation, and argue that this does not constitute a vicious circle. We then present a typology of ways of justifying taxation, according to which taxation can base its legitimacy on
(1) meeting basic needs
(2) financing public goods
(3) redistribution
(4) (dis)incentivising certain types of conduct.
We then discuss the applicability of each of these types of justification, arguing that all of them do apply at a global level. The article further concludes that different normative justifications guide us towards different designs of taxation in practice, so the background justification has to be made clear, especially when designing new taxation systems.
WHAT IS TAXATION?
Taxation, imposition of compulsory levies on individuals or entities by governments. Taxes are levied in almost every country of the world, primarily to raise revenue for government expenditures, although they serve other purposes as well.
This article is concerned with taxation in general, its principles, its objectives, and its effects; specifically, the article discusses the nature and purposes of taxation, whether taxes should be classified as direct or indirect, the history of taxation, canons and criteria of taxation, and economic effects of taxation, including shifting and incidence (identifying who bears the ultimate burden of taxes when that burden is passed from the person or entity deemed legally responsible for it to another). For further discussion of taxation’s role in fiscal policy, see government economic policy. In addition, see international trade for information on tariffs.
Purposes Of Taxation
During the 19th century the prevalent idea was that taxes should serve mainly to finance the government. In earlier times, and again today, governments have utilized taxation for other than merely fiscal purposes. One useful way to view the purpose of taxation, attributable to American economist Richard A. Musgrave, is to distinguish between objectives of resource allocation, income redistribution, and economic stability. (Economic growth or development and international competitiveness are sometimes listed as separate goals, but they can generally be subsumed under the other three.) In the absence of a strong reason for interference, such as the need to reduce pollution, the first objective, resource allocation, is furthered if tax policy does not interfere with market-determined allocations. The second objective, income redistribution, is meant to lessen inequalities in the distribution of income and wealth. The objective of stabilization—implemented through tax policy, government expenditure policy, monetary policy, and debt management—is that of maintaining high employment and price stability.
Collecting taxes and fees is a fundamental way for countries to generate public revenues that make it possible to finance investments in human capital, infrastructure, and the provision of services for citizens and businesses.
Preliminary analyses estimate the financing gap for achieving the Sustainable Development Goals for developing countries at about $2.5 trillion annually. Much of this financing gap will need to be met by increased private-sector investment in sustainability, which requires appropriate tax policies to create the needed price incentives. Yet, developing countries that are most in need of revenues, including fragile and conflict-affected states (FCS), often face the steepest challenges in collecting taxes.
Government collect tax for various reasons of which one on them is revenue generation. The government impose taxes on working class individuals so as to generate revenue which is used is so many ways like infrastructural development of a nation, to fund security and other expenditure.
Taxes are also levied to achieve greater equality in the distribution of wealth especially when following the progressive tax system whereby the richer you get the more the tax imposed.
Government also levy tax to control the economy, this is because when individuals acquire lots on income and are not being checked then there will be too much money in circulation forcing inflation.
Taxes are also imposed to control the consumption of certain commodities. The government use taxes to discourage consumers from taking in some commodities by imposing huge amount of tax which will come as indirect tax to the consumers, discouraging the consumers from purchasing the commodity totally or you reduce the intake.
Moreover, government also impose taxes to promote economic growth and development in form of tax holiday to firms to promote growth and in form of job opportunities to promote economic development
Government collect tax for various reasons of which one on them is revenue generation. The government impose taxes on working class individuals so as to generate revenue which is used is so many ways like infrastructural development of a nation, to fund security and other expenditure.
Taxes are also levied to achieve greater equality in the distribution of wealth especially when following the progressive tax system whereby the richer you get the more the tax imposed.
Government also levy tax to control the economy, this is because when individuals acquire lots on income and are not being checked then there will be too much money in circulation forcing inflation.
Taxes are also imposed to control the consumption of certain commodities. The government use taxes to discourage consumers from taking in some commodities by imposing huge amount of tax which will come as indirect tax to the consumers, discouraging the consumers from purchasing the commodity totally or you reduce the intake.
Moreover, government also impose taxes to promote economic growth and development in form of tax holiday to firms to promote growth and in form of job opportunities to promote economic development