3 Purposes of Taxation in a Modern Economy
- How Taxation impact the economy ?
The purpose of taxation is to finance government expenditures and activities that are necessary and beneficial to society. One of the most important uses of taxes is to finance public goods and services, such as streetlights, street cleaning, hospitals etc.
- How taxation impact society?Social justice lies at the heart of politics. Attitudes to the redistribution of wealth is a clear example. In a free market, some individuals generate greater amounts of income and capital than others.This value judgment tends to be countered by taxation policies that redistribute income and wealth away from the rich towards the poor, closing the gap. In addition, Annual Budget announcements that promotes amendments to tax policies, loans, and tax incentives, or mainly to cover the loopholes.
- How taxation impact the environment?The taxation system is moving slowly to accommodate the environmental concerns which have come to the fore over the last twenty years, especially the concerns about renewable and non-renewable sources of energy and global warming. Examples of tax changes that have been introduced for environmental reasons are:
(a) Policy on the consumption of energy. Its claimed purpose is to encourage reduced consumption.
(b) The changes to rules on the lease or purchase of cars, and taxation of cars and private fuel provided for employees to be dependent on CO2 emissions. Its claimed purpose is to encourage the manufacture and purchase of low CO2 emission cars to reduce emissions into the atmosphere caused by driving.Electrical cars, renewable energy tax incentives, and green technology are some of the examples.
(c) Implementation of Carbon Pricing and Carbon Tax.
