Question

Threaded Discussion:

Your initial post should be of a tax (including licenses or user fees) item from either Federal, State or local budgets. Explain how much you pay and what that tax revenue is used for... or supposed to be used for.

Answer 1

INTRODUCTION; Tax policy or taxation is a determination of tax amount impose on a person or business subject .

secondly, macro aspect this is one of the component of fiscal policy to check level of economic activities.

t'ax refers to amount pay by people and companies or any business unit to the government on the basis of certain rules or set of criteria such as INCOME , PROPERTY , EXPENDITURES(DOMESTIC AS WELL AS OUT OF NATIONAL BOUNDARIES)';

BROADLY CLASSIFIED AS

DIRECT TAX ; IMPOSED DIRECTLY ON PAYER EXAMPLE INCOME TAX, LICENSE FEES ETC.

INDIRECT TAX; WHICH INCLUDE IN GOODS AND SERVICES PRICES , ETC. EXAMPLE SALES TAX

thirdly, micro aspects concern about allocation of efficiency i.e which taxes will have how much of a distorting effect on the amount of tax or whom to impose tax

   tax policy is crucial because this can negatively or positively influence investment .

TAX POLICY ; in policy framework relates to formation of tax strategies which covers advantages and disadvantages of alternative tax formulation if applied .

two important aspects of policy are

1.attract investment

2.raising revenue which plays key role in economic development of country like infrastructure.

One the other hand flawed tax policy i.e which is not transparent and complex .may discourage investment.

PRINCIPLES OF TAXATION

ADAM SMITH'S CANON OF TAXATION

1. equity in sense of paying capacity in terms of income

2.convenience easy to pay

3.economy in process of tax collection.

FEW MORE PRINCIPLES ADD TO ABOVE CANONS .THAT ARE UP TO COUNTRIES REQUIREMENT AND ECONOMIC IDENTIFICATION OR CATEGORISATION

ASPECTS OF TAXATION;(that help to find out how much to pay as tax and revenue incurred will use for)

TO chectk the efficiency of tax policy of a country are as forth below;

1. tax burden consistency should have wide scope of development

2 .EVALUATION tax burden on domestic profits and tax distortion to investment.

3. accuracy in taxable income computation.

4. calculation of tax incentives which are unintended.

5. international tax consideration

6.estamation and understanding of potential tax effects on investment .

CONCLUSION

TAX THAT HAS TO PAY AND ITS RAISED REVENUE SUPPOSE TO BE USED FOR ;

THE TAX AMOUNT ON SPECIFIC LOCATION profit could be incresed up to the point where economic profit is exhausted without discouraging investment .

therefore to avoid tax revenue losses policy makers resist pressures to adobt a relatively low tax burden.