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    Purpose of Taxation

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    Kishore K
    Taxation serves four main purposes: to generate revenue for the government, redistribute wealth from rich to poor, reprice goods through taxes/subsidies to address externalities, and promote representation as citizens demand accountability from rulers imposing taxes. Taxes are collected by central and state governments from personal income, assets, property, wealth and transactions and used for developmental projects, armies, infrastructure, and government functions. Taxation includes direct taxes like income tax and indirect taxes, with direct taxes found to generate more accountability and better governance.

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    Purpose of Taxation

    Uploaded by

    Kishore K
    1K views2 pages
    Taxation serves four main purposes: to generate revenue for the government, redistribute wealth from rich to poor, reprice goods through taxes/subsidies to address externalities, and promote representation as citizens demand accountability from rulers imposing taxes. Taxes are collected by central and state governments from personal income, assets, property, wealth and transactions and used for developmental projects, armies, infrastructure, and government functions. Taxation includes direct taxes like income tax and indirect taxes, with direct taxes found to generate more accountability and better governance.

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    answer to why taxation is necessary

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    Purpose of taxation

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    Taxation serves four main purposes: to generate revenue for the government, redistribute wealth from rich to poor, reprice goods through taxes/subsidies to address externalities, and promote representation as citizens demand accountability from rulers imposing taxes. Taxes are collected by central and state governments from personal income, assets, property, wealth and transactions and used for developmental projects, armies, infrastructure, and government functions. Taxation includes direct taxes like income tax and indirect taxes, with direct taxes found to generate more accountability and better governance.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    1K views2 pages

    Purpose of Taxation

    Uploaded by

    Kishore K
    Taxation serves four main purposes: to generate revenue for the government, redistribute wealth from rich to poor, reprice goods through taxes/subsidies to address externalities, and promote representation as citizens demand accountability from rulers imposing taxes. Taxes are collected by central and state governments from personal income, assets, property, wealth and transactions and used for developmental projects, armies, infrastructure, and government functions. Taxation includes direct taxes like income tax and indirect taxes, with direct taxes found to generate more accountability and better governance.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Purpose of taxation.

    Tax is entirely different from fee. Tax is collected on the personal income, assets, property,
    wealth, transactions. Etc. Tax is collected by the central government or by the state
    government. The state government collects tax and hands over the same to the central
    government.

    Tax is of two types;

     Direct tax
     Indirect tax.

    Tax is a means of generating revenue to the government. Money collected by way of tax is
    used for variou8s developmental projects and other aspects.

    Taxation has four main purposes or effects:

    Revenue, Re-distribution, Re-pricing, and Representation. The main purpose is revenue: taxes
    raise money to spend on armies, roads, schools and hospitals, and on more indirect government
    functions like market regulation or legal systems.

    1. A second is redistribution. Normally, this means transferring wealth from the richer
    sections of society to poorer sections.

    2. A third purpose of taxation is repricing. Taxes are levied to address externalities; for
    example, tobacco is taxed to discourage smoking, and a carbon tax discourages use of
    carbon-based fuels.

    3. A fourth, consequential effect of taxation in its historical setting has been


    representation. The American revolutionary slogan "no taxation without
    representation" implied this: rulers tax citizens, and citizens demand accountability
    from their rulers as the other part of this bargain. Studies have shown that direct taxation
    (such as income taxes) generates the greatest degree of accountability and better
    governance, while indirect taxation tends to have smaller effects.
    Therefore, these are the essential features of taxation

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