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Taxation - Essay Example

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Taxation and its merits Name: Course: Professor: Date: Taxation and its merits Taxes are the main source of state, federal and local government revenues used to pay expenses in vital sectors such as public education, exploration, science, infrastructure and salaries for government employees (James, 2009 p.743)…
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Taxation

28). Therefore, from this claim the people who own many assets or earn some good salaries pay more to the government trough taxation. Taxation is, therefore, necessary in order to meet the cost of expenses and in the running of day-to-day government affairs. “It is the sole responsibility of the government to collect taxes and ensure that it is carefully spent for the benefit of the citizens” (Mirrlees & Adam, 2011 p. 39). Taxation is the main means through which governments raise the required money to pay for commodities and services that they provide for the people. In fact, most governments depend on taxes to pay for the major portion of their spending since it is their major source of revenue. “It is important to note that, governments are always under pressure from citizens demanding quality education, health care, security and infrastructure” (Lymer & Hasseldine, 2002 p. 17). Taxes at the local level are necessary for construction of classrooms, public libraries, security service stations, sport facilities, as well as for the payment of municipal employees and county directors government revenues (obtained from taxes) are essential. The government to run the budget without borrowing grants from other countries uses taxes (Ahmad, 1999 p. 82). However, taxation is not the only way governments use to collect money for their spending. “Government’s cannas well levy a variety of users to pay for bridges, parks, and sports stadiums among other services to get revenue from users rather than the taxpayers” (Barro & Boskin, 1978 p. 125). “In addition, Governments also borrow funds to support their tax revenues whenever they run short of target in budget” (Claus, 2010). The standard of living of the modern society demands taxation by all means, this is because the government must collect taxes in order to meet the needs, wants and demands of its citizenry. No government can exist without taxation, though taxation can never exist without the government, as well. “One could, therefore, argue that taxation is a necessity for the governments to run all the activities aimed at improving the living standards of the citizens all over the world” (Keen & Smith, 2000 p 40). “The value added tax is a form of consumption tax. This is the tax imposed on to the buyer when purchasing goods from any dealer whereas on the prospect of the seller, it is the tax imposed on the product, service or the material from an accounting point of view from the producer” (James, 2009 p 13). The final consumer is taxed in this way and; hence, the total tax levied at each stage is what makes continuous chain of supply; thus, collection of VAT is borne by the business but not the state. Tax merits The collection of VAT in the UK has a number of merits for instance; it enables the government to create a stronger incentive to collect revenues even through the sales tax are low. This is because the final consumer of the product cannot easily evade payment unlike trough the previous method and does not give the seller the legality to collect it. “The UK government has been able to balance the amount of taxes collected per year through VAT since the seller is the motivator of the buyer but has no direct economic incentive to collect it” (Bird, 1999 p 25). It has also been able to balance the application of equal taxes to each member of the production chain without much care on the position in it and ... Read More
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