Gdp Economic Growth

It establishes the nexus between the tax system and economy of a country hence I will aim at showing the role of the tax law in increasing a country’s economic growth. It defines the concepts of tax law (and related terms such as taxation) and economic growth, as well as explain how they manifest in the society. I will then establish the relation between the two concepts and conclude with the various ways in which tax law increases economic growth.

Economic growth refers to the increase in a country’s productive capacity as measured by comparing the gross national product (GNP) in a year with the GNP in the previous year. Economic growth therefore means an increase in real GDP. The importance of GDP lies in the fact that it provides a basis

It determines the persons or property to be subjected to tax, the sums to be paid as tax, the time and manner of levying, receipt and collection of the taxes as well as the mode of enforcing the obligations upon taxpayers. It is usually portrayed as a forced charge since it is not paid according to the payer’s will but as an obligation. Tax law covers the rules, policies and laws that oversee the tax process, which involves charges upon transactions, property, income, licenses and more by the government. Taxation also includes duties on imports from foreign countries and all compulsory levies imposed by the government upon individuals for benefit of the state. The complex nature of tax law involves payment of a minimum sum as tax to government, either directly or indirectly. Indirect taxes are assessed against products and services that are meant to be consumed, but are paid to an intermediary like a retailer for example, a tax paid when one buys soap from a local shop. Direct taxes are those you pay directly to the government and are imposed against things like land or real/personal property, and

This includes taxes that are difficult to implement and would otherwise reduce the revenue. Such laws should also be geared to widening the tax base for example laws that denounce export taxes. Where the tax law imposes a ‘fair sum’ which can easily be complied with by the citizens, it leads to increased revenue collection. Similar to this, where the modes of collecting the tax are abided to, such as the indirect taxes, then more revenue will be generated through taxation. This is in contract to the much depleting graduated tax that has become gradually shunned due to the difficulty in enforcing