The Four Characteristics Of A Good Tax System

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A GOOD TAX SYSTEM
Defining Tax A tax, as defined by the Taxation UWI text book, is a legal obligation to pay a certain percentage of income or profits to government imposed on taxpayers, that is, any person or organization required by law to pay tax. Legal penalties would be forced upon taxpayers for failure to make tax payments.
Characteristics of a good tax system A Tax System, according to the online Free Dictionary is “a legal system for assessing and collecting taxes”. For a country to progress through their collection of taxes it must entail a good tax system. According to Adam Smith’s The Wealth of a Nation, he noted four main characteristics of a good tax system namely:
(1) Taxes imposed must be equitable;
(2)A Tax System should …show more content…

Taxes should be collected and paid at the most appropriate time for the tax collector and taxpayer in speaking in terms of convenience. For example, income tax collected at source. Taxes that are difficult to administer should not be imposed on the taxpayer. Finally, according to Adam Smith, taxes imposed on taxpayers should be certain rather than random. Taxpayers should be aware beforehand the amount of tax required to be paid and how it is to be paid to government. The tax system should be simple, in terms of tax payers as well as tax collectors are well aware of the requirements. It should be balanced in the sense that not only one set of people should be taxed. A good tax system should be able to generate sufficient revenue for government expenditures. Administration must be honest and fair, although a country may have the majority characteristics of a good tax system, if administration is unfair it can bring about different outcome as the ones intended. The characteristics mentioned above determine how much revenue is produced, the fairness of the tax system and its ability to produce economic

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