In: Accounting
(a) Taxes are primary revenue yielding tools of the Government of modern ages. You are required to state any three non-revenue objectives which the Government achieves by imposing taxation. (05) (b) List any five taxes which can be imposed by the Federal Government.
(solve in the context of pakistan)
(a)
Non revenue objectives of taxation are
1. Reduction of inequality : Income taxes are imposed on the people with higher income and this allowing the government to bring equality among the citizens of the country to some extent.
2. Balance of Payments : Customs duties have their say in deciding Balance of payments of a country. Balance of payments means a countries exports and imports in terms of a foreign currency. The changes in customs duty either increase or decrease the imports and exports there by helping government in stabilization.
3. Price Stabilization : Taxes are used by government as a tool to control inflation. If the tax rates increased this will result in decrease in disposable income in hands of citizens thus reducing the inflation.
4. Protection to local firm : Customs duties are used to protect the local firms by imposing higher customs duties on imports and thereby making these imported to goods costly. Also soem industries are given subsidies thus reducing their cost of production and making profitable.
(b)
Five taxes which federal government can impose
1. Income Tax
2. Customs Duties
3. Federal Excise Duty
4. Capital duty on capital contribution
5. Property taxes
6. Stamp duties on Share issue and disposal