4 Principles of taxation you should know

When the government introduced taxation system, they put on some principles in order to serve the people really well. There are different principles of taxation that had been made for several years, but the four major principles are popularly known to the economists throughout the world.  

Main purpose of taxation

Most people want to avoid paying the tax to the government. If it would have been intentional, then there had been very less people who would be willing to pay their taxes to the government. This is the reason why many people still do not understand the importance of taxation, however they only find the government that wants them to pay the due tax at any cost. You need to pay your taxes on time because the government will need the money in order to stay afloat. The government will be using this money for the construction of, roads, offices, schools and much more.

4 Principles related to taxation system

Read on to know about the 4 principles related to taxation system.

     1. Efficiency– This principle of taxation system discusses about the entire cost of collecting the taxes that should be very much of creating taxation system. The costs that have been discussed are divided into administrative and compliance costs. The administrative costs are intended at guarantying that the government plays its important role like cost of printing forms, employment of tax officials and much more. The compliance costs will be acquired by the taxpayer in a proposal to be sure that the tax has already been paid.

    2.Equity – Another important principle of taxation is equity. This principle specifies that the taxation system should be in a way that the wealth is reallocated to the poor people from the rich so that the people may be able to pay as per their capacity. This principle has brought progressive taxation system in various countries.

     3.Flexibility – The third principle is flexibility. The tax system should not be firm, however it should be flexible so that in case there is any kind of change in the economy that demand changes in tax laws, it should be quite easy to make the necessary changes. A tax system in which it is extremely difficult for making the changes to legislation on tax can be very difficult to run.

     4.Certainty – The last principle of taxation is certainty. In spite the fact that the taxation system should be flexible for allowing the necessary changes, it need not be liquefied. A good taxation system is the one that is firm which will enable to forecast easily how the situation is going to be in the coming years. This is very important since it makes a sense of stability , particularly for the investors.

Thus, these are the four taxation principles that are very much needed for any country if the country is eagerly looking ahead to grow in the future. If you are residing in the beautiful place balled Malta, then you need to know about taxation in Malta properly so that you may pay your taxes on time.