Name and briefly explain four major principles of a good tax system

(i) Economical:

  • Low cost of collection to the tax body
    Low compliance costs by the taxpayer.

(ii) Equity:

Horizontal equity: People with the same economic position should pay equal amount of tax.
Vertical equity: Consideration is taken as to whether tax payable should be proportional to income i.e progressive or regressive.

(iii) Certainty:

Clear to taxpayer what his liability actually is and how it arises To the tax body it is guaranteed of the amount of revenue its going to collect

Share through

Leave a Reply

Your email address will not be published.