Finally the system of collecting taxes must be efficient. For example if the government spends more in order to collect a given amount of tax money it is useless having a system of taxation. In the UK the current system of taxation has a number of shortcomings such as collective bias in favor of those who are able to pay and structural deficiencies at the deduction level.
The British system of taxation is basically determined by a desire to act in conformance with the age old principles of taxation as enunciated by Adam Smith. In the first instance taxes must be fair or equitable; secondly they must be convenient; thirdly they must be neutral; fourthly they must be efficient; fifthly they must be simple; and sixthly they must be adequate (Jones & Catanach, 2008). Yet how far these principles have been adhered to in the current situation in Britain is to be decided by each individual because there is much more to be desired in the British tax system with reference to the equity principle and the government's efforts to redistribute income on a nation-wide basis.
According to the first maxim of Adam Smith as noted above every person should pay in proportion to that which is based on their respective revenue earnings and to the extent to which they enjoy protection of the government. Simply it is the "ability to pay" principle. Further he shows that tax should be levied on economic rent because the rent and the revenue were considered as synonyms in Smith's days. However according to the tax system revenue includes only income from an investment and it excludes wages and salaries. Thus in the18th century Britain most of the income was earned from landed properties. In the 21st century Britain where services have come to occupy a very important place, the old approaches to taxation might not be feasible though the fundamental principles remain intact.
Secondly, tax payers must be certain about the current and future periods of time. Moreover, it must be predictable and should not be arbitrary. Each person should be aware about the exact amount that he/she has to pay according to their earnings. They should know reasons, exceptions/biases, and abatements when they are paying taxes. Government revenue budgets are either one year in duration or less (Ricardo, 2006). This affects businesses because they have to plan for corporate taxation a number of months, if not years, in advance. According to the third maxim, tax payment should be convenient to the tax payer. In fact the government should be flexible in the application of the tax rules. For example in demanding due payments, collecting payments and so on, tax authorities ought to identify more convenient ways so that the taxpayer isn't inconvenienced by way of haphazard schedules and rules as in the case of VAT financial penalty on late payers in Britain.
Finally, tax system should be efficient with reference to its determination cost and collection cost. Thus it ought to be as lower as possible. It is imperative that the cost of employing the tax officials should be less than the taxpayers' personal cost. However the British government has to spend a considerable amount of money on such things as maintaining records and form filling to collect taxes from people.