Taxation: Why is It Important?

April 17, 2010 | By admin | Filed in: Business Law, Tax Law.

What is taxation? Why is taxation 1 800 new loan so important in a particular nation or state? What makes it a very significant aspect of governance?

Cooley defines taxation as the process or means 02116 cash advance by which the sovereign, through its law-making body, raises income to defray the necessary expenses of government. Expressed in another way, it is a 1 800 numbers for payday loans method of apportioning the cost of government among those who in some measure are privileged to enjoy its benefits and must, therefore, bear its burdens.

Malcolm explains that taxation is the power vested in the legislature to impose burdens or charges upon persons and property for the purpose of raising revenue for public purposes.

The nature of the state’s power to tax is two-fold. It is both an inherent power and a legislative power. It is inherent in nature being an attribute of sovereignty. It has been argued that it is literally impossible for the state to run its affairs without taxes. Its existence and operations are dependent primarily from the revenues and charges imposed from various sources. It is a legislative power because it involves promulgation and implementation of rules. Taxation is a set of rules, how much is the tax to be paid, who pays the tax to whom and when it should be paid.

Government financial operations are well-nigh impossible without taxation. Apart from this, taxation can be a powerful means in order to achieve the golas of social progress and the objectives of economic development. It serves as a device to encourage the growth certain activities by way of giving exemptions, discourage use of certain products by way of imposing heavier charges like those sin taxes which are imposed upon tobacco products, or strengthen anaemic enterprises, also by way of tax exemptions. Local industries may be protected through taxation by imposing high customs duties to foreign goods. Moreover, taxation can also be used to reduce inequities or inequalities in wealth and income by progressively higher taxes as in the case of estate and income tax.

So based on the foregoing premises, it is clear that taxation is indeed the lifeblood of the state, without which the existence of the state will be put to jeopardy.

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