Define taxation. State canon of taxation.
=> Taxation is a compulsory levy enforced by government as per prevailing law of nation which generally payable with money. It it main source of income for government of any country to generate source to maintain public expenditures and spend money for public welfare.
Government can collects teh required revenues by adopting an ideal tax policy. for formulating and ideal policy, there are required different principles , these principles are known as the canon of taxation.
The canon of taxation are below:
a)Canon of equality or equity:
This canon of taxation states that tax levied by the government based on ability to pay of tax payers. According to the principle, the amount of tax paid by the tax payers shouldn't be equal for all people. The tax amount charged by the government should be based on earnings of tax payers. Tax payers who utilized more facilities of government should pay more tax and tax payer who utilize less facilities or resources of the government should pay less tax.
b) canon of co-ordination:
This principle states that while formulating the policy there should be co-ordination between central government and local government. so that, there should not be imposed similar nature of taxes by various authority. There shouldn't impose duplication of tax from the central government and local government , which collection of the tax revenue.
c) canon of certainty:
Under this principle, tax payment procedures should contain or fixed to both the tax payers and government in terms of the amount to be paid, time of payment, method of payment, the place of payment and the authority to who tax is being paid. Normally, it shouldn't be change , but it should be stable . Predetermined tax collection procedures should be implemented .
d)canon of simplicity:
According to this principle the tax system applied by the government should be simple and easy to understand by general public. The tax system should not too lengthy and complex. because it creates problem of interpretation and disputes between tax authority and tax payers.
This also brings irregularities and corruption , therefore, this is a good principle to apply in a developing country to enhance productivity.
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