Because we are bringing you such helpful articles every day. Higher income tax can enable a redistribution of income within society, but may have an. For example, higher taxes on carbon emissions will increase cost for producers, reduce demand and shift demand towards alternatives. If you like this article, share it with your friends and turn on the website Bell icon, so don’t miss any articles in the near future. of the benefit principle of taxation: excise taxes can be tailored to impose tax burdens on those who benefit from government services financed by excise. Taxation on goods, income or wealth influence economic behaviour and the distribution of resources.
BENEFIT PRINCIPLE OF TAXATION WITH DIAGRAM FULL
Hope you get the full details about it and hope you like this article. So friends, this was the benefit of taxation? (Benefit of Tax). Therefore in such a situation we can not use benefit principle to distribute the tax. Increasing alcohol excise taxes could also directly beneft low-income. (ii) Government provide different types of services to the community, as a whole, not an individual basis. Based on economic theory, therefore, increasing the price of alcohol would be. Thus according to this the poor should bear higher taxes.
This is because poor people receive higher benefits from the expenditure programme of a govt. (i) According to critics, the benefit principle does not obey the principle of justice. The benefit theory of taxation or benefit of tax has been criticised on the following ground. Criticism of benefit of taxation or benefit of tax
The higher the benefits, the higher is the tax and vice-versa. It means taxation goes in proportion to the benefit enjoyed by the people. The percentage of taxes also increase from OM to OM1. The ability-to-pay principle of taxation takes account of this fact and. Here AB is the benefit line.įrom the above figure, it is clear to us that when benefit increases from OP to OP1. Use a circular flow diagram to show how the allocation of resources and the. On OY axis we measure percentage increase in benefit. On OX axis we measure percentage increases in taxes. This principle of taxation has been explained with the help of a following diagram. We get-Īggregate benefit = Total volume of taxes. Therefore, according to the benefit theory of taxation or benefit of tax. In this way, this theory emphasises that justice in taxation should be done it taxes are imposed in proportion to the benefit enjoyed by the people from the various services of the government. Thus taxation is just like a price for the services provided by the government. should not impose the taxes greater than the benefits received by the tax payers. The person receiving equal benefits from the government should pay equal amount as taxes and those receiving greater benefits should pay more as taxes than those receiving less benefits.
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