What are the objectives of taxation in developing countries? What principle or principles of taxation would...

What are the objectives of taxation in developing countries? What principle or principles of taxation would serve these objectives?

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Expert Solution

There are various types of objectives of taxation in an developing country because developing country need a higher amount of growth so taxation will be playing an important role and objectives of taxation would be as follows-

A. Taxation will be helping in attraction of foreign direct investment because if the tax rate are low, it will be leading to attraction of the foreign investment and it will be leading to increase of the economic development in the country through foreign investment.

B. Taxation will also be trying to aim towards full employment in the country. it can be done through cutting of the tax rate in order to increase the demand and employment in the country.

C.it will also be helping in reduction of the balance of the payment because they better taxation system will be leading to a stable balance of payment and it will be helpful in growth of the entire economy.

D. Reduction of inequality of the income and the wealth is another type of objective which is related to taxation system because taxation system will be trying to remove all such inequalities which are existing in in economy by implementation of a better taxation system.

E. Economic fluctuations and control are another important focus of the taxation system because when there would be fluctuations in the economy, the taxation system will be synchronised in order to establish the demand.

F. Price stability in an optimum manner is another objective of the taxation system which will be helpful in the developing country in order to maintain the price and it will also help in generation of a stable demand for a longer period of time.

Principle of fairness in economic development and equity in economic development will be striving towards achievement of these objectives.

jeff jeffy answered 1 year ago

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