The central VAT i.e. Cenvat which is currently levied has a narrow base and multiple rates and is levied on goods at the production stage. The value added in subsequent stages is not included in the base in case of Cenvat. In the Central GST that has been proposed, the base will be expanded by merging the service tax with the Cenvat, extended to wholesale and retail levels and will be simplified to have only one or two rates. The merger of service tax in GST helps to ensure not only a more comprehensive input tax credit but also relieves the tax on exports.
This can be done by linking the costs or benefits of those impacts to those who are involved in the economic transaction. The externalities can be internalized if the producer of a good or service change their behavior or adopt new technologies and practice to minimize the impact. The government also could pass regulations that force the producer to change their behavior or to adopt new technologies and practices to minimize the impact. The consumers can voluntarily pay an additional fee to pay for goods or services with fewer externalities. Further, government can use taxes an incentives for the producers to cut back on pollution (Pigou, 1920s).
3Indirect taxes are imposed on spending to buy goods and services. They are paid partly by consumers, but are paid to the government by producers (firms), and for this reason are called ‘indirect’. These could include taxes on goods. Since cigarettes are
Emissions trading is cost efficient because polluters with large emission reduction costs will buy emission rights from polluters with low emission reduction costs (Woerdman et al., 2008). “Grandfathering” is when the emission rights are allocated free of charge to polluters in the form of emission caps based on their past emissions, this suggests that emitters only have to pay for the extra costs of emission reduction and not for their emissions as in the case of the polluter pays principle (Woerdman et al., 2008). Because of this “grandfathering” has turned out to be the more prevalent method of assigning emission allowances (Woerdman et al., 2008). The downside to “grandfathering” is that firms may now have an incentive to pollute in order to acquire more allowances (Woerdman et al., 2008). ).
If there the purchasing power tends to be excessive during inflation, it is curbed through increasing of taxes. They are progressive Direct taxes help reduce the gap that there is in the inequalities of people’s income. It therefore helps bring social equality. DEMERITS OF DIRECT TAXES Encourages tax evasion Direct taxes make a person to evade paying tax because of high tax rates and poor tax administration. Tax payers evade taxes by manipulating accounts to give incorrect information about their incomes It causes inconvenience Direct taxes tend to be inconvenient as they involve some procedures in the filing in of the returns.
If one then need to advice on which rate to apply the question would be – what is the purpose of the tax. Is it to raise revenue or to discourage consumption? With cigarettes and alcohol one of the objectives is certainly to discourage consumption. It is therefore only sensible to tax alcohol or cigarettes on the content and not he value. Cnossen believes that “since the damage caused by smoking, drinking or pollution is independent of price, the correction of externalities favours specific over ad valorem”.
As we have already indicated that tax is more like an income to our government to pay for other public services, in addition, government is also using that tax money to create job opportunities. E.g. tax money could be used for infrastructure, (for construction of hospitals, roads, bridges, clinics etc.,) and by so doing that, the number of unemployment will be reduced in our country.Tax money helps the nation to protect themselves as they cover the military expenses, tax money is also used to provide people who are less privileged with RDP houses, grant money, and also used to assist other learners and students in
In general, goods that were previously not charged Sales Tax would increase in price once GST came into effect from April 1, 2015. Goods that were previously charged a higher rate of Sales Tax might not see significant price charges, and in some cases might even decrease in price. Unlike income tax, individual do not need to bother with the administrative aspects of GST as the tax is collected on their behalf by businesses. They do not have to file tax returns. Impact on business GST also effects the businesses operating in Malaysia.
Another important section of taxation is tax deduction. The tax liability is calculated by subtracting the personal deduction and standard exemption from taxable income, therefore, tax deduction and exemptions are inversely related with tax liability. And they are often used to entice taxpayers to participate in programs which have a societal benefit, such as charitable donations, people are imposed by less tax since the donation amount are removed from taxable income. Thus, both the taxpayer and society are
The present study aims at developing a deeper understanding of the problem of tax evasion and avoidance in developing countries. Against the background of growing interest by international development cooperation, governments of developing and developed countries and international institutions in this topic, this study shall contribute to the systematization of knowledge. It becomes apparent that although there is a theoretical basis explaining tax evasion and tax avoidance behavior, we know little about the patterns and the extent of tax evasion and avoidance in the regions of the world and the different techniques used to evade and avoid paying taxes in individual developing countries. 2. What is the issue?