effective tax collection

Public Finance is divided in to three categories i.e. government expenditure, government Debt and government revenue. Government expenditures are the expenditures incurred by the government for development of the country. Government debts are obtained from internal and external sources such as commercial banks, financial institutions, IMF (International Monetary Fund), WB (World Bank) etc. the government revenue comes from the taxation system prevailing in a country. The taxes may be direct or indirect. The amount of money collected as taxes from the people by the government is utilized in providing services for the general benefit of the people.

There are certain principles that the government and tax authorities should meet up in order to collect taxes from the people. Collect more tax from the rich and poor shall pay less. The tax system should be progressive in nature. Progressive tax is that kind of tax, which depends upon the level of income, the higher the income the more is the tax. The tax authorities should levy the system of equality in tax collection mattes. Equality means equality of sacrifice i.e. people should pau tax in proportion to their incomes. The tax system in order to be efficient and effective needs to follow some principles and develop modern techniques. These steps include certainty of tax amount, elasticity in tax mattes, diversification of taxes, simple methods of collection, economical taxes and much more.

Certainty in tax amount is much helpful in collecting taxes as people do not have to go in the hardships of calculating there taxes, the amount and manner of payment may be described to the people and everything should be made clear and simple. Tax can be effectively collected by introducing a variety of direct and indirect taxes, so that the whole community participates in tax system.

Publisher: Fadiyah Sameh

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