Category: Tax

Tax System And Its Principles

Taxes are generally perceived as a burden by most ordinary citizens and legislators however it is through taxation that the government can raise revenue to fund provision of many public goods and services and distributing wealth. “Taxes are what we pay for a civilised society”, wrote Oliver Wendell Holmes. Broadly, the purposes of taxation are vast including funding for physical infrastructure such as rail and other transport systems, funding for social protection i.e. unemployment & disability protection. Tax is thus justified by the benefits it offers to society. If such benefits are not provided to society, the reason for collecting taxes is lost. There are 3 main bases of taxation: income, capital, and expenditure. With a focus on personal income tax, the purpose of this essay is to explore the challenges that may arise in designing an effective personal income system. While most countries, (particularly developing countries) rely on all the 3 bases, developed countries tend to shift focus mainly on income tax in generating revenue.

How do we identify a good tax system? A good and effective tax system should be designed for equity, efficiency, convenience, and certainty according to Adam Smith’s ‘Canons of Taxation’. Smith outlines his 4 main principles that establish a proper tax system (ifs.org.uk):

• The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities
• The tax which the individual is bound to pay ought to be certain and not arbitrary …
• Every tax ought to be levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay it.
• Every tax ought to be so contrived as to take out and keep out of the pockets as little as possible, over and above that which it brings into the public treasury of the state.

Additionally, when designing a good income tax system there are other factors that also need to be considered such as tax structure, tax rates, tax burdens, taxpayers’ behaviour, and economic welfare. Most developed countries rely on income taxes as their main source of revenue, so it is crucial to consider such factors. When designing a tax system, policy makers need to take into consideration how taxes affect the distribution of income and how the tax burden will be shared between tax individuals with different incomes. This helps to establish if a tax will be proportional, progressive, or regressive. A proportional structure is one where individuals pay the same tax rate on their income regardless of what they earn. A progressive structure is where those with low incomes pay a lower tax rate than high-income earners. This structure is typical of income tax. A progressive structure is thus seen as one that reduces inequality in income distribution. With a regressive structure, low-income earners pay a higher percentage of taxes than higher income earners. Every country has its own way of manging their tax systems and there are many aspects to look at when reviewing what an effective income system needs; having to examine what is fair and what is feasible, and this can be challenging for policy makers.

Understanding the importance of fairness

Before we delve into the challenges faced when designing a good personal income tax system, it is vital that we understand the importance of fairness in tax. One of the principles Adam Smith points out is that ‘the subject of every state ought to contribute towards the support of the government, as nearly as positive in proportion to their respective abilities…”. He stresses that proportionality should exist with taxes in line with the level and sources of income. Chrestensen (1994) carried out a research titled “The impact of education on the perception of tax fairness” and identified different dimensions of tax fairness: fairness of the tax system, fairness of personal payment level, exchange with the government, tax rate structure, and fairness of special provisions. (Journal of economic sciences)

The importance of fairness rests in how just the system is. Tax burdens should fall on individuals fairly considering their socioeconomic status and their ability to pay. Ability-to-pay principle requires that taxpayers be taxed according to their scope to bear the tax burden. A necessary condition when it comes to equity in tax, is an equal treatment of taxpayers with equal circumstances. This is known as horizontal equity where those with similar income pay the same amount of taxes. This ensures no discrimination considering race, gender etc. In contrast, vertical equity requires tax burdens vary in proportion to income. This implies that those with higher incomes should pay more taxes since people differ in a way that some individuals have different circumstances. It is often accented that the “wealthy” should not have to suffer tax burdens since they have earned their money, but a good tax system should appreciate every worker.

It is also important to understand fairness from taxpayers’ point of view which tends to be shaped by what the government is doing right for them. Is the government providing essential services to their citizens? If so, are the citizens satisfied with how their taxes are utilised? Kirchler (1997) conducted a study on how Australian taxpayers argued that government needs to focus their public spending more on education and health, as well as research and preserving their culture. Similarly, Brazilians have argued for implementation of policies to focus tax spending more on health education and poverty. Andrews (2003) expressed how governments should view society as customers and establish trust and a satisfactory relationship with their “customers”.

Complexity and costs

What makes personal income tax complex? Despite many calls for simplification, the income tax system remains to be significantly complex. Much of its complexity exists from a legal basis though issues may arise in several forms. Prebble (1994) points out that tax legislation is more complex than it needs to be (James and Nobes 2015/16) and that this is due to trying to fit the law around the “natural facts of economic life” thus resulting in the law itself being complex. Complex laws might affect tax individuals’ willingness to comply with the tax system, especially with a system of self-assessment. An overly complex system may also make it difficult for government to estimate future revenues and costs thus implementing economic strategies will be more difficult to do.

There are also complications when defining ‘income’ and deciding the chargeable income and defining capital gains, business income etc. Defining a tax base is just as important as determining what tax rates to implement. When trying to decide what constitutes as income and what to tax, legislation must look at: what is income, whose income it is, the kind of income & when is it income. (William Vickrey, ‘Tax Simplification Through Cumulative Averaging), which leads to reviews over what defines Income, Capital gains etc. More importantly, as a result of its complexity, the tax system incurs great costs that arise from many reasons including trying to simplify the system e.g. costs that are incurred due to trying to make the tax base display tax individuals’ ability to pay. Administrative costs are costs to the government incurred throughout the process of collecting taxes. These include data collection costs, record collecting costs, liaising with tax authorities, filing returns, and dealing with enquiries. Compliance costs, or the “hidden costs of taxation”, are costs incurred mainly by taxpayers’ due to their behaviour. A taxpayer may choose to pay or reduce their tax liability. This is the distinction between tax avoidance and evasion. Tax avoidance is legal manipulation to reduce amount of tax to pay whereas evasion is the illegal practice of avoiding paying tax. Both constitute as non-compliance and can have great implications on the government. If it is realized that tax individuals benefit from such non-compliance it may reduce ‘tax morale’ collectively and in turn reduce compliance which means more costs incurred through more enforcement activities. For a tax system to be effective, it is vital that most tax individuals comply however there are many reasons why taxpayers may fail to comply, and the government need to question how best to tackle this. Government needs to realize that enforcement activities such as fines, number of tax rates is not the sole strategy to improve compliance and could possibly increase tax complexity instead.

Influence of inflation

The effect of inflation on the income tax system has not received much attention since the worldwide decline of inflation rates in the 1980s. In an income tax system, inflation can distort tax base and the tax structure. With a progressive tax structure, high income earners are subject to higher tax rates and with inflation, they are again subjected to increasing tax rates. To compensate for inflation, this means more adjustments by tax authorities and self-assessments. High inflation rates leads to tax authorities increasing tax rates by increasing the prices on goods and services which will affect household income and spending. Mahdavi (2008), reported findings on how inflation is one of the major factors that influences a country’s tax policies. Understanding how such a determining factor can affect some elements of tax revenue is important for tax authorities in designing an effective tax system that will not significantly affect taxpayers’ savings and choices. Qadir Patoli et al. (2012) conducted a study on the impact of inflation on taxation in Pakistan and established that inflation has a positive correlation with taxation. Changes in inflation rates could affect tax rates and consequently affect tax morale resulting to evasion or avoidance. Increase in tax rates caused by inflation when rules are not adjusted will largely affect low-income earners more than high-income earners which again raises a question of equity when designing an income tax system.

Conclusion

Most countries face significant fiscal challenges. A good and effective income tax system should not only be about yielding revenue but should also incorporate a fair tax environment by considering the ability to pay and encouraging low compliance costs. The notion of fairness though not simple to define, in respect of law should be about locating the tax burden enough to leave taxpayers with enough income for their day-to-day activities. In designing an income tax system, for many developing countries, the focus is how they can increase revenue rather than a question of “if they should”. The only possible way to increase revenue is to increase tax rates and improve their tax administration but this is easier said than done. Increasing tax rates could increase inequity since those who cannot bear the burden may choose to flee from it. Imposing taxes has great economic costs well past the costs of revenue collection. Taxation also has effects on behaviour which consequently will affect people’s decisions about their work pattern, how much savings they acquire and how much they can consume, and this can thus be a disincentive to work effort. Additionally, compliance costs of tax as well as public administration costs must be considered. In designing a personal tax system, the government will hence face such challenges and therefore need to find some balance between how they raise revenue, equity, efficiency and lowering the economic costs of taxation, which can be difficult.

Strategies For The Improvement Of Property Tax Collection In Tanzania

Executive summary

This study will focus on investigating and identifying the relationship between strategies and property tax collection in Tanzania. Specifically, it aims at examining the strategies for the improvement of property tax collection in government, identifying the major challenges confronting property tax collection, and suggests possible measures to overcome those challenges to increase revenue collection from the property owners. The study intends to involve 120 respondents from 4 wards of Ngaramtoni Township Authority at TRA-Arumeru in Arusha, Tanzania. The study anticipates gathering both primary and secondary data that will enable a pile-up of the findings. The researcher will gather primary data through questionnaires, interviews, and spot observation, and secondary data from books and various documents. Scientific Package for Social Science (SPSS) Version 25 software will be used on data analysis. Hence, the study will help government efforts on revenue collection to meet public services demand.

Introduction

This study will focus on assessing the Strategies towards Improvement of Property Tax Collection. The study will be a descriptive survey design to find out better strategies for revenue collection on property tax.

Background of the Study

In Africa, meeting demand for public services is a great challenge, so governments must raise funds to meet social services (Kironde, 2000). Property tax has a potential effect on public finance in developing countries (Aluko, 2005). It’s a vital ingredient of fiscal policy for governments and is a source of revenue in most countries (Bahl, 2007).

In Tanzania, property tax was initially been collected by LGAs before shifted to the central government where currently TRA is collecting its revenue since the government’s financial year 2017/2018. The government’s decision for property tax to be collected by TRA was due to cities, municipalities, and district councils performing poorly in property tax collection but still TRA is not performing well in property tax collection.

From the above argument, the researcher sees poor property tax collection is a result of a lack of appropriate strategies for property tax collection by authorities. He believes this is a problem that facing Tanzania government and other developing countries’ governments, so he will conduct a study on strategies for improving property tax collection to help the government collect maximum revenue from property tax. Property tax is a vital area of taxation that promising huge revenue to the government (Vlassenko (2001)).

Statement of the problem

The current government efforts on raising economic development via industrial transformation demand financial resources to implement its community projects. Property tax is vital areas of taxation that will contribute significant revenue in implementing government services, example about 29.9% of government services payment comes from property tax by Youngman (2005) in the U.S.A study. But due to challenges, it cannot be easy to achieve maximum property tax collection especially in developing countries (Kelly R. & Montes M. (2001)). There no appropriate strategies to overcome the loss of revenue from property tax in government authority. So researcher on this study will focus on finding out appropriate strategies for improvement of property tax collection in Tanzania because currently, property tax contributes very low revenue compared to other sources of revenue while it seems as it can contribute huge revenue.

The objective of the study

This study aims at assessing strategies for the improvement of property tax collection in Tanzania. This will be complemented by three specific objectives namely under:

• To examine strategies for improving property tax collection,
• To identify major challenges confronting Property Tax Collection; and
• Suggesting ways that could help increase property tax collection.

Significance of the Study

Property tax is among the government levies promising revenue collection in Tanzania. This is because it involves residents whose own properties are required by law to pay tax on each property they own either for residential or commercial. This study will create awareness within the government on ways of increasing revenue collection on property tax.

However, the study will make a scholarly contribution by acting a reference to other scholars who may have an interest in studying the relation of property tax and economic development.

Literature review on Property Tax

In a study conducted by (Bird, and Slack, 2002), Property taxes appear to be inconsequential revenue sources when compared with other sources of revenue contributing to the country’s GDP. For example, in developed countries, the property tax was a bit more than 1% of GDP as compared to other taxes about 4%. Also, Kayuza’s (2006) study conducted in Tanzania revealed that property tax generates very low revenue due to insufficient database on valued properties and resistance on paying tax bill by property taxpayer, this leads to not meet project revenue budget on property tax by the government.

In a study conducted by Franzsen (2001) in Australia on the impact of property tax to the economy revealed property tax in developing counties are relay excluded on local authorities own source revenue, contrary to rich countries that including it, an example property tax to GDP ratio recorded in Canada 4.1%, US 2.9% and Australia 2.5%.

Kelly R. & Montes M. (2001) in their study in Malawi, sports that developing countries tend to collect significantly less property tax revenue. For example; Fjeldstad (2004), revealed that about 20% of the citizen in Tanzania whose are property owners are liable to pay property tax while the rest undervalued not paying property tax lead to revenue loss in property tax. The problem with this study considers all the challenges with no strategies to overcome the loss of revenue in property tax and is based on the tax collection system leaving taxpayers.

Smoka and Cesare (2006) sports that unknown tenure rights due to informal buildings and much slums in cities and municipalities cause it difficult to identify the taxable property and corresponding taxpayers on the determination of property values in a market. Properties should be revalued in five years interval to capture the correct market value due to some renovation made on such property, long term with no valuation lead to low revenue collection from the source due to unrealistic data (Kitillya, 2011).

Property tax antiquity from Tanzania was levied on hut and houses during the colonial era. Local Government Finance Act of 1982 and the Urban Authorities Rating Act of 1983 give power to cities and municipals to collect taxes including property tax. Problems encountered on property tax collection are lack of effective statutory rates, inconsistency in valuation /assessment of properties, and insufficient records (kelly & Musunu, 2000).

James & Nobes (2000) revealed that the framework benchmark for various tax system proposals should be put into consideration and used as a checklist for important aspects that ought to be included.

Walker (1970) points out that put clear in people’s minds the benefits from the government on taxes; it will raise the willingness of them to pay taxes. Therefore, the tax burden should be linked to the taxpayer’s level of economic wellbeing (Slemrod & Bakija, 2001).

Research Methodology

Since the study will be centered on studying the relationship between the variables, a descriptive design will be employed. It will also base on both quantitative and qualitative research approach through a case study strategy. The rationale behind the research design and approaches selected is the nature of the problem. Purposive and simple random sampling will be used to get the sample from the targeted population. The study will deploy a survey questionnaire comprise both, closed and open-ended, which focuses on property tax in which participants will respond to it in the study. Furthermore, the spot observation and in-depth interview will be applied to supplement the data which will be collected through the mentioned data sources.

Conclusion

The government revenue comprises property tax, service levy, income tax, corporate tax, value-added tax, sales tax, crop produce cess, land rent, business licenses e.t.c. Consequently, the improvement of property tax collection will lead to an increase in government revenue hence the implementation of community projects.

REFERENCE

1. Aluko, B.T. (2005). „Building Urban Local Governance Fiscal Autonomy through Property Taxation Financing Option‟. International Journal of Strategic Property Management 9: 201-214
2. Bahl, R.W (2007). “The Property Tax in Developing Countries,” Working Paper, Lincoln Institute of Land Policy, July.
3. Bird, Richard M., and E. Slack. (2002). International Handbook on Land and Property Tax, Edward Elgar Publishing Inc, Cheltenham, United Kingdom.
4. Fjeldstad O H. (2004).To pay or not to pay tax, Citizens views on taxation in local authorities in Tanzania‟. Chr. Michelsen Institute & Research on Poverty Alleviation.
5. Franzsen, R.C.D. (2001). “Property taxation in Southern and East Africa: facing up to the challenges”, paper presented at the 5th Annual Conference of the International Property Tax Institute, Hong Kong.
6. Harry M. Kitillya (2011). Commissioner-General from Tanzania Revenue Authority in 4th ITD global conference on “tax and inequality” New Delhi, India. Presentation paper on “Problems affecting Real Property Tax Administration in Tanzania and its Impact on Equity.
7. Hidaya M. Kayuza,(2006). Real Property Taxation in Tanzania An investigation on implementation and taxpayer perceptions.
8. Kelly, R. & Masunu, Z (2000) ‘Implementing Property Tax Reform in Tanzania’. Lincoln Institute of Land Policy. Working Paper WP00RK1. URL http://www.lincolinst.ed
9. Kelly, R. & Montes, M. (2001). „Improving Revenue Mobilisation in Malawi: Study on Business Licensing and Property Rates‟. Government of Malawi and the United Nations Capital Development Fund. UNDP.
10. Kironde, J. (2000). “Financing the Sustainable Development of Cities: The Case of Dar Es Salaam and Mwanza in Tanzania.” Unpublished paper prepared for UNCHS-HABITAT (December).
11. Slemrod, J., & Bakija, J. (2001) Taxing Ourselves: A Citizen’s Guide to the Great Debate over Tax Reform. Cambridge: MIT Press.
12. Smolka, M. O.& Cesare, C. M. (2006). property tax.
13. Walker, D. (1970) ‘Taxation and Taxable Capacity in Underdeveloped Countries’, in M. C. Taylor (ed), Taxation for African economic development. London: Hutchison Educational Ltd. pp 203-234

Tax Avoidance Law And Its Effects

Introduction

A multitude of Multinational Companies (MNCs) across the global economy use ambiguities or loopholes in global tax laws in order to reach a desired outcome, often in the best interest of maximising shareholder and/or private corporate value through paying less tax (Contractor, 2016). HM Revenue and Customs (2016) states that such tax avoidance is often comprised of contrived, artificial transactions which lead to a tax advantage that Parliament never intended.

Types of tax avoidance strategies include the deferral of foreign affiliate income, transfer pricing, royalty payments, global cost division and inversions (Contractor, op. cit.). Multinational corporations can utilise the above strategies to reduce tax expenditure legally across a globe which is separated by varying jurisdictions in relation to taxation (ibid). Therefore, as a result of the absence of a homogenous international tax regime, such loopholes can be exploited, resulting in aggressive tax avoidance rather than simple tax planning which can have multiple adverse effects on economies and states internationally.

This essay conveys that it is not the responsibility of MNCs to pay more tax than legally required. If legal loopholes exist, then MNCs should be allowed to exploit them and any negative effects brought about by tax planning is at the fault of the law itself and its creators. It also portrays how tax competitiveness worldwide is simply a part of international economic rivalry and how the extent of MNCs’ tax avoidance and self-regulation could be controlled by their view on corporate social responsibility and hence reputation. However, global cooperation on tax reform could minimise various disadvantages that arise from ambiguities in global tax laws.

This essay will analyse and critically evaluate some of the effects of tax planning and hence conclude whether such effects are advantageous and or disadvantageous with respect to various stakeholders and highly industrialised countries. Academic literature and real-life examples will be used throughout to support ideas expressed.

Governmental tax revenue reduction/ Corporate tax gain

A key result of tax avoidance, especially in highly industrialised countries, is a reduction in tax revenue collected by governments. Markle (2015) found that a substantial number of highly industrialised countries fail to tax MNCs’ foreign affiliates’ profits which in the US, for example, could have contributed to the estimated loss of $2.1 to $3 trillion in unrepatriated profits from US multinational foreign affiliates (Contractor, op. cit.). In the UK, recent examples include Starbucks’ European business paying an effective UK tax rate of just 2.8% in the year to the end of October 2017 as a pose to the actual corporate tax rate of 19.5% (Marriage, 2018), whilst Google, despite generating £3.4 billion in UK revenues last year, only paid £20.4 million in corporate tax (Neate, 2014). Although the foreign income of MNCs is taxable in the US, a substantial loophole exists where after taxes have been paid on foreign affiliates’ income in different countries, any extra profit can simply escape US tax legislation by not being remitted back to the US (Contractor, op. cit.).

A reduction in tax revenue can be seen as disadvantageous to the Governments and citizens of the UK and US as less money is available to invest in national operations such as infrastructure, health and education. On the other hand, how negative this outcome could be depends on what and where such tax revenue would have actually been spent on and its positive effects on the domestic economy. Moreover, it could be argued that if such loopholes exist, it is a firm’s legal right to retain such tax planning gains. The above sources simply convey a negative effect through figures of lost tax revenue but on the contrary, such tax gain by MNCs could be re-invested back into the country, cancelling out the negative effect of lost tax revenue. Hong and Smart (2010) suggest such tax planning opportunities allow countries to at least maintain corporate tax rates whilst still attracting foreign direct investment (FDI). Therefore, tax gain here could be seen as advantageous to a country as well as the MNC, subject to how such tax gain is spent. The positive effects MNCs can bring to nations through investment may be the reason why such loopholes still exist whilst also simultaneously attempting to prevent expatriation of key MNC operations.

Tax avoidance and its effect on MNCs’ reputations and corporate social responsibility

Brennan and Atkins (2008) provide an insight into the evolution of corporate governance and how MNCs have started to shift from the agency theory where a business’ processes solely account for its shareholders to a more inclusive, stakeholder-orientated approach. This elucidates how MNCs may be starting to self-regulate themselves in terms of the amount of tax they pay in order to sustain a positive reputation in society by harnessing their corporate social responsibility. Elbra and Mikler (2016) further support this in portraying corporate reputations are integral assets which can be heavily affected by not paying tax appropriately. This shows that the negative effect reputation can have on financial performance could offset the extent to which MNCs avoid paying tax. Real life instances can support this argument, for example, due to prior tax avoidance that gravitated solely towards the accountability of shareholders, Starbucks moved their headquarters from Amsterdam to London in an attempt to reprimand previous tax avoidance and showcase their acknowledgement of all stakeholder accountability and social responsibility (Marriage, 2018) . Facebook also announced they will report their revenue from advertising in UK instead of re-route through Ireland, the spokesman of the company said that this action is to show company’s increasing concentration on social responsibility, and earn public trust back (The Guardian, 2017).

Here, the ambiguities in global tax laws can be seen to regulate themselves and the MNCs utilising them, through reputation and corporate social responsibility, showing how such ambiguities can be advantageous. However, the extent to which this supposed trade-off is reached could still mean a significant amount of tax avoidance is carried out, again creating the disadvantages aforementioned through a reduction in government tax revenue. Moreover, despite Brennan and Atkins (2008) suggesting a trend in MNCs behavior, this doesn’t prove all MNCs are doing the same which can create significant inequalities in the amount of tax being paid by different firms. On the contrary, if it is the choice of the firm to exploit legal loopholes in the law then equally, it is the choice of the firm to realise its corporate social responsibility and act on it. Therefore, if a MNC does not correlate their brand value with their social responsibility, they are unlikely to voluntarily pay tax, negating the potential for such positive effects from existing ambiguities in global tax laws.

Global tax competitiveness

Ambiguities in global tax laws create international tax competitiveness which has the potential to fuel the global economy. For example, Neate (2014) conveys how the double Irish loophole allows multinational US companies to funnel a substantial amount of their income through Ireland to reduce their national tax bill by paying a corporate tax rate of 12.5% or less. O’connor (2014) highlights how Ireland’s low corporate income stance can encourage labour supply and demand whilst simultaneously incentivising FDI. Here, ambiguities in global tax laws are shown to benefit Ireland but also in this example disadvantage the US through reduced tax revenue. This is a prime example of tax competitiveness and shouldn’t discourage Ireland’s tax policies but yet exist as just one part of a competitive global economy.

A study by Deloitte (2014) which involved 800 corporate executives in 20 jurisdictions discovered that corporate taxation policy and transfer pricing abilities were of upmost importance for MNCs when making key FDI decisions. This further highlights how tax competitiveness brought about by global ambiguities in tax laws is fundamental in MNCs’ decision making. Therefore, a country’s tax policy can be either advantageous or disadvantageous depending on the stance of the policy towards MNCs and hence attracting FDI. This relates back to international economic rivalry stated in this paper’s thesis statement; it is ultimately at the choice of the MNC where to base and transfer operations and finance and therefore at the choice of government tax policies to incentivise such.

On the other hand, Elbra and Mikler (2016) point out that the tax competition global ambiguities create can be detrimental and have the ability to actually distort trade and investment whilst diminish national tax bases. This is not necessarily true as those countries with high tax-rates such as the UK and US are already global hubs for investment and trade which is why they are able to charge such high corporate tax-rates. Therefore, the tax avoidance incurred in such highly industrialised countries by large MNC’s can be offset by not only the sheer scale of investment and trade but also the high levels of income tax and corporate tax of solely national operating firms.

In addition to this, Contractor (2016) states that’s many executives of MNCs in highly industrialised countries like the UK and US already think taxes are too high and in turn suffer a competitive disadvantage, especially against rival MNCs which operate in countries with less rigorous tax laws. I believe global tax competition resulting in less after-tax income for MNCs can also be disadvantageous to their domestic economies and stakeholders. For example, suppliers who rely on large MNCs can be heavily affected if stringent tax laws are enforced on their biggest customers. Moreover, customers of the MNCs themselves get less benefit from new, innovative and better quality products due to a lack of research and development which could have been funded by corporate tax deductions.

Conclusion

In conclusion, whilst loopholes in global tax law exist, I believe MNCs should be allowed to exploit them as long as doing so is legal. The disadvantage of reduced tax revenue for governments through tax planning in highly industrialised countries could be offset by re-investment back into the country whilst on the other hand, if not re-invested, the extra tax revenue could have been invested by the government into integral infrastructural projects. This brings about the question of whether the money will be spent better in the hands of an MNC or a government which can be extremely subjective and depends whose interests are most regarded. To ensure such tax gain is spent effectively, global laws could be implemented to guarantee that any tax gain by MNCs is spent through FDI and/or product/service research and development.

Corporate social responsibility and reputation can act as an effective form of self -regulation, highlighting further that ambiguities in global tax laws won’t be exploited indefinitely by most MNCs. Moreover, through obvious exploitation of such ambiguities and MNCs stating it is their legal right to do so, they are potentially exposing themselves to international re-regulation which could alleviate any disadvantages at present. Palan and Wigan (2014) state the success of a global tax reform simply depends on sustaining international cooperation whilst Sharman (2006) believes it is a near impossible task due to global economic competitiveness and national sovereignty.

I believe Fischer’s theory used by economists to manage foreign exchange risk can be applied to ambiguities in global tax laws so that firms, through the implementation of a global tax rate, cannot benefit through the channelling of funds to tax havens or the stockpiling of assets in shell companies.

Sales Tax On Newspaper In India

Introduction

We all have a slight idea about sales tax. Whenever we purchase an item, the amout to be paid in the bill is higher than the price tag mentioned on the product. This additional amount of money that we pay while purchasing any goods is sales tax. Sales tax can be defined as an indirect tax which is charged while purchasing or exchanging of certain taxable goods, and is charged as a percentage of the value of the product. The sales tax is decided by the Government in power and the policies enforced by the Government.

It is important to note that the amount or tax that we pay to the sellers doesn’t belong to them. These sellers have to collect taxes from consumers as a part of their agreement for settling their business in the particular state or city. Every month sellers have to pay this collected money to the state or local government. But, why do we all pay taxes? Government uses this collected tax for the benefit of social or public services like safe roads and bridges, public schools, government servants like police officers, firefighters, cleaners and also for military purposes.

Types of sales tax

Sales tax depends upon the government in power of a individual country but universally these following types of sales tax are considered.

• Retail sales tax. The tax that is charged on the sale of retail goods and is directly paid by the final consumer is known as retail sales tax. This is the most common way used by the state or local government for collecting tax on the products like toothpaste, paper towels, clothing etc.
• Manufacturers’ tax. This tax is imposed on manufacteres of certain goods. Manufacturers’ tax should also be paid by the producers of tangible personal property.
• Wholesale sales tax. Wholesale sales tax is imposed on the dealers of wholesale products or sale of the manufactured goods. Cigarettes and alcohol usually are applicable for this tax.
• Use tax. Use tax is imposed on those consumers who have purchased goods without sales tax. These are purchased generally from the vendors who are not under the tax jurisdiction.
• Value added tax. Value added tax includes every possible way used by the government authorities by which tax can be collected through sales and production of products and services.

Sales tax on newspaper in India

Constitution have been consciously avoiding sales tax on newspaper. According to Entry 92A of the Union list, sales tax were applied to or imposed on inter-state or commerce on various goods except newspaper. And also Entry 54 of the State list imposed sales tax on the sale or purchase of goods other than newspaper. The new Article 246A authorised parliament as well as the State. GST can be difined in simpler terms as a tax imposed on supply of goods or services or even both except taxes on supply of alcoholic liquor for human consumption as mentioned in the Article 366(12A). After this constitutional amendment, central and state government have the power to impose GST on newspaper.

But as per the GST law, GST is not payable on newspapers. The rate of GST payable on newspaper is nil rate. GST is applicable on printing purpose as when paper or other media is supplied by the client foer printing, the GST rate imposed is 5%, and when such paper or media is acquired by the printer himself towards order of client, the GST rate is 12%. The council has approved 5% GST on commonly used goods and services, 12% GST on standard goods and services falling under 1st slab, 18% GST is imposed on standard goods and services falling under the 2nd slab. 28% GST is imposed on luxurious goods and services.

As newspaper is amongst the basic and essential thing for everyone. Every citizen has a right to have the latest information and know the recent happening of their country and world which comes under right to information. So government does not charge sales tax on it because if they charge sales tax then the cost to the buyer increase which will restrict the poor people to buy the newspaper. However the sale of old newspaper is charged with sales tax on it. Also somewhere freedom of speech and expression as well as freedom of press will be violated if charged with taxes.

However GST is imposed upon the advertisements printed in the newspaper. The government of India clarified that selling advertisement space in the print media or newspaper, would attract 5% and 18% of GST. This rate depends on the terms and conditions if the contract signed between newspaper, advertisement agency and the client. If the adversitement agency buys space from the newspaper and sells such space for advertisement to clients on its account, the the payable GST would be 5% on the ful amount charged by thr advertisement agency from the client. Secondly, if the advertisement agency sells space for advertisement as an agent of the newspaper on the availibility of commission, then the payable GST would be 18% on the sale commission it received from the newspaper.

Related judgements

Sakal papers Ltd. and Anr. v. Union of India

Sakal papers is a marathi newspaper company with only two shareholders. One of the reader of this newspaper claimed that the daily addition of the newspaper contains six pages a day for five days in a week and four pages on one day. This edition is priced at 7 nP. The Sunday edition consists of ten pages and is priced at 12nP. About 40% of the space in the newspaper is taken up by advertisement matter and the rest is &voted to news, articles, features, Views etc. It is claimed on behalf of the petitioners that one of the special features of the newspaper is coverage of foreign news and despatches on foreign affairs. The Supreme Court in this case struck down the Newspaper (Price and Page) Act, 1956 which authorises the Centre to regulate price in relation to pages and sizes and to regulate allocation of space for advertisements. According to the Court Article 19(1)(a) of the Constitution of India is violated which grants freedom of speech and expression.

Indian express v. Union of India

This petition was filed by the companies, employees, and shareholders as well as trusts engaged in the publication of the newspapers. They challenged the import duty on newsprint under the Customs Tariff Act 1975 and the auxiliary duty under the Finance Act 1981, as modified by notifications under the Customs Act 1962 with effect from March 1, 1981. The Supreme Court of India observed that the government was indeed allowed to impose taxes affecting the publication of newspapers because such publication could be characterized as an industry and must be subject to the same imposition as other industries. However, the court said that the power of taxation violated the freedom of speech and expression under Article 19(1)(a), the restriction on the freedom must be within reasonable limits.

Conclusion

Public has a right to know about all the information about their nation as well as world. Newspaper is one of the means to provide this information to public easily. Newspaper is considered as the basic and important need of the people. Imposing taxes on newspaper can make them expensive for those who are poor. All this necessary information should be reached to all the people of the nation as therefore should be affordable for all. Also imposing taxes on newspaper may somehow violate the fundamental right of right to freedom of speech and expression including right to press. Afterall it is the decision of the government in power about imposing sales tax on goods and services.

On the other hand, sales tax is an important amount to be paid by the citizens to the sate or local government because this amount is used for the better living of the public itself. To provide better services for public like safe roads and bridges, safety purpose like more police officers, firefighters, cleaners and many more. For the very reason government need money and this money is collected as sales tax from all of us. It is the duty of every citizen to pay reasonable amount of taxes to the government on a regular basis.

References

1. https://www.business-standard.com/article/news-ians/5-18-gst-applicable-on-selling-advertisement-space-in-print-117082301249_1.html#:~:text=%C2%ABBack-,’5%25%2C%2018%25%20GST%20applicable%20on,selling%20advertisement%20space%20in%20print’&text=The%20government%20on%20Wednesday%20clarified,advertisement%20agency%20and%20the%20client.
2. https://www.bankbazaar.com/sales-tax.html
3. Hord, J. (1921). The Sales Tax. The Annals of the American Academy of Political and Social Science, 95, 193-207. Retrieved June 30, 2020, from www.jstor.org/stable/1014551

Taxation: Types, Purpose And Importance

What is taxation and its purposes?

Tax assessment alludes to the act of an administration gathering cash from its residents to pay for public administrations. Without tax collection, there would be no open libraries or parks. One of the most often discussed political themes is tax assessment. Tax assessment is the act of gathering cash from residents dependent on their income and property. The cash raised from tax collection bolsters the legislature and permits it to support police and courts, have a military, form and look after streets, alongside numerous different administrations. Tax assessment is the cost of being a resident, however lawmakers and residents frequently contend about how much tax collection is nearly nothing or to an extreme.

The reason for tax collection is to raise incomes from all potential sources to help government consumptions and administrations and to advance the overall prosperity and assurance of its residents. It likewise shields recently opened businesses to spearheading and new ventures to spearheading and new enterprises and different undertakings. It additionally shields homegrown makers by imposing a lot higher custom obligations on imported merchandise.

What are taxes and their importance?

Duties are automatic charges exacted on people or enterprises and upheld by an administration substance whether neighborhood, provincial or public so as to fund government exercises. In financial matters, charges fall on whoever pays the weight of the duty, regardless of whether this is the element being burdened, for example, a business, or the end customers of the business’ products.

In current economies charges are the main wellspring of administrative income. Duties contrast from different wellsprings of income in that they are necessary and are solitary; they are commonly not paid in return for some particular thing, for example, a specific public assistance, the offer of public property, or the issuance of public obligation. While charges are apparently gathered for the government assistance of citizens overall, the individual citizen’s risk is autonomous of a particular advantage. There are, nonetheless, significant exemptions: finance charges, for instance, are regularly collected on work pay so as to back retirement benefits, clinical installments, and other government managed retirement programs which are all liable to profit the citizen. Due to the presumably connection between charges paid and benefits got, finance charges are once in a while called commitments. All things considered, the installments are generally mandatory, and the connection to benefits is in some cases very frail. Another case of an expense that is connected to benefits got, if just freely, is the utilization of duties on engine powers to back the development and support of streets and roadways, whose administrations can be delighted in simply by burning-through burdened engine energizes.

Types of taxes

Duties speak to the measure of cash we pay to the Government at predefined rates and periodicity. Expenses are the fundamental wellspring of income to the Government utilizing which it gives different sorts of administrations to the citizens.

FICA and other finance charges

These are charges that businesses eliminate from your check and ship off the proper government organization. In case you’re a specialist or independently employed, you should pay these on a quarterly premise through assessed charges.

Notwithstanding annual expenses, there are government burdens that store Social Security and Medicare. These together are the FICA (Federal Insurance Contributions Act) charges. Citizens need to pay 6.2% of their pay to Social Security and 1.45% to Medicare. Your boss additionally contributes an equivalent measure of FICA charge for you.

Independent work charges

In case you’re independently employed, you need to pay a similar pay and finance burdens that others pay. In any case, rather than covering the FICA charge, you need to settle the independent work charge. Fortunately you can deduct half of your independent work charges when you document your yearly personal expenses.

Capital increases charges

At the point when you sell resources, you may need to pay capital additions charges on your net increases. Basic resources incorporate ventures and land. You additionally need to pay charge when you sell collectible or significant things, for example, gems or an assortment of uncommon stamps.

The government capital increases rate you pay relies generally upon how long you claimed the resource. You pay the momentary capital increases rates in the event that you held resources for one year or less. These rates are equivalent to customary personal assessment rates.

You pay the drawn out capital additions rates, which are lower than the normal duty rates, in the event that you held resources for over one year. Note that expresses that gathering annual duty likewise gathers capital increases charges.

Bequest charges

Bequest charge applies to the cash and resources that you pass on after your demise. This incorporates money, ventures, land and different resources. Your domain makes good on the expense yet the amount you pay, in the event that you need to pay anything by any means, relies upon the estimation of the home. Just bequests esteemed over a specific limit are liable to burden. This limit is otherwise called the exception or prohibition sum.

Legacy charges

Like a bequest charge, legacy charges apply to what in particular’s passed on after somebody kicks the bucket. Nonetheless, the expense doesn’t emerge from the bequest prior to being passed on. All things considered, the individual acquiring the cash or resources pays the expense contingent upon the amount they have acquired. There is no government legacy charge and only six states gather a legacy tax.The charge rate relies upon the amount you acquire and your relationship to the perished.

Abundance charges

An abundance charge is a duty on an individual’s whole total assets. Your total assets is the joint estimation of your yearly pay, individual reserve funds, speculation accounts, property, land, and different effects, similar to gems or collectibles.

Promotion valorem charges

An advertisement valorem charge depends straightforwardly on the estimation of a decent, administration or property.

Property charges

At the point when you purchase a home, notwithstanding your home loan and mortgage holders protection, you should cover property charges. This is an advertisement valorem charge dependent on the estimation of your property. City or region governments normally gather property charges. A few zones likewise demand charges by school area or as indicated by other neighborhood regions.

The amount you pay relies upon where you live. Not all spots gather property charges dependent on the whole estimation of your home. For instance, you may live in a territory that gathers charge dependent on only 40% of the estimation of your home. How your area decides property estimation will likewise contrast all around.

Worth added charge

A worth added charge applies to products you buy. It’s like a business charge in that sense, yet it’s distinctive in light of the fact that isn’t simply applied to the last deal cost of an item. It applies at each phase of the creation cycle, in view of the worth that has been added to the item.

Since the item is burdened all through creation, the value you find in a store as of now incorporates it. This is unique in relation to deals charge, which you address notwithstanding a retailer’s cost

Utilization charges

A utilization charge applies when you buy certain merchandise and ventures. These are frequently circuitous charges in light of the fact that despite the fact that the legislature is gathering the expense from a retailer, the individual who purchases the great is the person who makes good on the assessment.

Direct And Indirect Taxation: Tax liability And TDS

Question: 1

The introduction:

Tax liability:

Income tax payable is a type of account in the curreincome and brings within its scope all the taxable income, profits or gains of an assessed which fall outside the scope of any other head. Therefore, when any income, profit or gain does not fall precisely under any of the other specific heads but is chargeable under the provisions of the Act, it would be charged under this head.

Casual Income:

Casual income means income in the nature of winning from lotteries, crossword puzzles, races including horse races, card games and other games of any sort, gambling, betting etc. Such winnings are chargeable to tax at a flat rate of 30% under section 115BB.

Conditions:

• a. No expenditure or allowance can be allowed from such income.
• b. Deduction under Chapter VI-A is not allowable from such income.
• c. Adjustment of unexhausted basic exemption limit is also not permitted against such income.

Any sum of money or value of property received without consideration or for inadequate consideration to be subject to tax in the hands of the recipient [Section 56(2)(x)]

In order to prevent the practice of receiving sum of money or the property without consideration or for inadequate consideration, section 56(2)(x) brings to tax any sum of money or the value of any property received by any person without consideration or the value of any property received for inadequate consideration.

Sum of Money: If any sum of money is received without consideration, and the aggregate value of which exceeds ₹ 50,000, the whole of the aggregate value of such sum is chargeable to tax.

Immovable property:

• I. If an immovable property is received
  • A. Without consideration, the stamp duty value of such property would be taxed as the income of the recipient if it exceeds ₹ 50,000.
  • B. For a consideration, which is less than the stamp duty value of the property by an amount exceeding ₹ 50,000, the difference between the stamp duty value and the consideration shall be chargeable to tax in the hands of the assesse as “Income from other sources”.
• II. Value of property to be considered where the date of agreement is different from date of registration: Taking into consideration the possible time gap between the date of agreement and the date of registration, the stamp duty value may be taken as on the date of agreement instead of the date of registration, if the date of the agreement fixing the amount of consideration for the transfer of the immovable property and the date of registration are not the same, provided whole or part of the consideration has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system (ECS) through a bank account on or before the date of agreement.
• III. If the stamp duty value of immovable property is disputed by the assessee, the Assessing Officer may refer the valuation of such property to a Valuation Officer. In such a case, the provisions of section 50C and section 155(15) shall, as far as may be, apply for determining the value of such property.

As per section 50C, if such value is less than the stamp duty value, the same would be taken for determining the value of such property, for computation of income under this head in the hands of the buyer.

Movable Property:

If the movable property is received

1. Without consideration, the aggregate fair market value of such property on the date of receipt would be taxed as the income of the recipient, if it exceeds ₹ 50,000.
2. For a consideration which is less than the fair market value of the property by an amount exceeding ₹ 50,000, and the difference between the aggregate fair market value and such consideration exceeds ₹ 50,000, such difference would be taxed as the income of the recipient.

The conclusion:

The Income Tax Act is a comprehensive statute that focuses on the different rules and regulations that govern taxation in the country. It provides for levying, administering, collecting and recovering income tax for the Indian government. It was enacted in 1961.

The Income Tax Act contains a total of 23 chapters and 298 sections according to the official website of the Income Tax Department of India. Income tax in India is a tax you pay to the government based on your income (and profit, in the case of companies). The government uses this tax money for various purposes including public services, infrastructure development, defence spending and subsidies among other options.

Question: 3

The introduction:

TDS:

TDS is basically a part of income tax. It has to be deducted by a person for certain payments made by them. In this article, we will discuss in detail about the TDS provisions under the Income Tax Act.

TDS or Tax Deducted at Source is income tax reduced from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons making such payments.

Usually, the person receiving income is liable to pay income tax. But the government with the help of Tax Deducted at Source provisions makes sure that income tax is deducted in advance from the payments being made by you.

The recipient of income receives the net amount (after reducing TDS). The recipient will add the gross amount to his income and the amount of TDS is adjusted against his final tax liability. The recipient takes credit of the amount already deducted and paid on his behalf.

Any person making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such specified payment. But no TDS has to deducted if the person making the payment is an individual or HUF whose books are not required to be audited.

However, in case of rent payments made by individuals and HUF exceeding Rs 50,000 per month, are required to deduct TDS @ 5% even if the individual or HUF is not liable for a tax audit. Also, such Individuals and HUF liable to deduct TDS @ 5% need not apply for TAN.

Concepts and application:

The applicability of TDS provision:

TDS stands for ‘Tax Deducted at Source’. It was introduced to collect tax at the source from where an individual’s income is generated. The government uses TDS as a tool to collect tax in order to minimise tax evasion by taxing the income (partially or wholly) at the time it is generated rather than at a later date.

TDS is applicable on the various incomes such as salaries, interest received, commission received, dividends etc.

TDS is not applicable to all incomes and persons for all transactions. Different TDS rates have been prescribed by the Income Tax Act for different payments and different categories of recipients. For example, payment of redemption proceeds by a debt mutual fund to a resident individual is not subject to TDS but for a Non-resident Indian is subject to TDS.

TDS works on the concept that every person making specified type of payments to any person shall deduct tax at the rates prescribed in the Income Tax Act at source and deposit the same into the government’s account.

The person who is making the payment is responsible for deducting the tax and depositing the same with government. This person is known as ‘deductor’. On the other hand, the person who receives the payment after the tax deduction is called ‘deductee’. Form26AS is a statement which shows the amount of tax deducted and deposited in a person’s name/PAN in a particular financial year. An individual can, therefore, view/check the TDS from incomes paid to him by viewing this Form 26AS. Each deductor is also duty bound to issue a TDS certificate certifying how much amount is deducted in the deductee’s name and deposited with the government.

The entity making a payment (which is subject to TDS) deducts a certain percentage of the amount paid as tax and pays the balance to the recipient. The recipient also gets a certificate from the deductor stating the amount of TDS. The deductee can claim this TDS amount as tax paid by him (i.e. the deductee) for the financial year in which it is deducted.

The deductor is duty bound to deposit the TDS with the government. Once deposited this amount reflects in the Form 26AS of individual deductees on the TRACES website linked to the income tax department’s e-filing website.

TDS only applicable above a threshold level:

One must remember that TDS on specified transactions is deducted only when the value of payment is above the specified threshold level. No TDS will be deducted if the value does not cross the specified level.

Different threshold levels are specified by the Income Tax department for different payments such as salaries, interest received etc. For example, there will be no TDS on the total interest received on FD/FDs from a single bank if it is less than Rs 40,000 in a year from that bank. For senior citizens, TDS on interest received on FD will be applicable if it crosses Rs 50,000 in a single financial year. Tax Deducted at Source (TDS) was introduced by the government to crack down on the tax evaders. TDS is basically collecting tax at source. TDS can also be considered a prepayment of tax. As per the TDS concept, if the payment exceeds a defined threshold, then a company or a person making the payment (deductor) must deduct tax while making a payment. The deductor must then deposit the tax deducted into the account of the central government on behalf of the recipient of income.

Correct Answer & Interpretation:

A. Explain and examine the applicability of TDS provision:

As per section 192 of income tax act 1961 tax is required to be deducted on payment of income chargeable under the head income form salaries.

In computation of total income employer may consider loss form house property of employee if employee furnished first detail to employer.

B. Compute total tax liability and monthly deduction for TDS:

Computation of total tax liability

Particulars Amount

Income from salary head 750000

Less: Set off losses from house property

1. Let out house property (360000)
2. Self occoupied property (200000) Total : 560000
3. Subject to maximum : 200000 (200000)

Total income 550000

Add: income from Fixed deposit 150000

Total income 700000

Tax liability

Not tax up to 300000

Tax @ 5 % (500000 – 300000) 10000

Tax @ 20% (700000 – 500000) 40000

50000

Add: Health and education cess 2000

Total tax liability 52000

Computation of monthly Tax deduction at source under section 192: 52000 / 12 = 4333.33 per month

Economic Impact Of The Food Tax

Introduction

According to WHO, the four major non-communicable diseases (NCDs) in the world include of cardiovascular diseases, diabetes, cancer and chronic respiratory diseases. Poor diet and obesity are most common preventable risk factor for the occurrence of the NCDs. Globally 40 million deaths occur due to it. While in Australia 90% of the deaths occur due to NCDs [1] In 2015, 19.7% of the deaths and 9.5% DALYs occurred due to NCDs caused by poor diet. [2] According to the Australian Bureau of Statistics, “6 million people suffer from hypertension, 1.7 million have signs for chronic kidney disease, 1 million suffer from diabetes and 600000 Australians have cardiovascular diseases”. [3] Due to increased consumption of the unhealthy food and beverages, the risk of obesity and NCDs are continuously rising. [4] In 2017, 63.4 % of the adult and 27.4% of the children were obese in Australia.[5]

The economic cost associated with NCDs is around $27 billion in Australia which is about 36% of the health expenditure due to all diseases. About $8.6 million is due to poor diet-related NCDs. [6] As the poor diet has larger contribution for the NCDs worldwide, this report summarises about how the food tax have been implemented in different part of the world and its cost-effective measure to control NCDs. The information for this report is collected from peer-reviewed journals and articles by database search like Medline, government data and websites from the internet and advanced google search and books from Monash library.

Risk factors for the NCDs

The major risk factors contributing to NCDs includes of: Poor Diet, alcohol, smoking and reduced physical activity.

1). Poor diet

About 7.2-7.9% of the NCDs occur due to it. [7] In the recent era of fast food, the consumption of high-density food rich in saturated fats, sugar, salt and calorie give rise to obesity and overweight. Childhood obesity is major public health concern these days leading to varieties of the chronic illness like cancer, cardiovascular diseases, obstructive sleep apnea and diabetes.[7] Various environmental and behavioural factors play important role in the development of the obesity. Reduced activity, increase in the social media and television usage, parental factors and negative impact by food advertising are identify risk factors for obesity. [8]

2). Smoking and alcohol

They contribute around 7-7.2% for the development of NCDs [7]. Environmental factors like family gatherings, clubbing, peer support, mental stress, depression and other mental imbalance can influence people to smoke and drinks. Various strategies like tobacco tax, health warning signs, plain packaging, sales tax on alcohol beverages and ban on the public smoking have significantly impact on the reduction of smoking and alcohol consumption, but still target is yet to achieve. [9]

3). Reduced physical activity and high BMI

1.2 to 5.5% of the NCDs occur due to it. [7] Excessive use of social media, increase workload, more time spent in front of the TV have substantially reduced physical activity among people mainly children. Most of the children having both working parents and the bicycle drive to school have been reduced these days. Also, most of the food is fed in front of the television which increase the consumption of Unhealthy and high-density food.[10]

Who are at risk?

Poor diet-related NCDs are not evenly distributed. Various studies have reported that the people with lower education, lower income, low socioeconomic group people, people who are already obese or suffer from chronic illness are at higher risk for the NCDs [11] In Australia, Aboriginal and Torres strait Islanders have double chances for the development of diabetes, cardiovascular diseases and increased cholesterol level with higher risk of mortality compared to the non-indigenous population.[12]

Strategies

The epidemic of the NCDs occurs globally due to the alcohol, smoking and unhealthy diet consumption. As a result, it increases productivity and health care expenditures. Numerous strategies have been adopted worldwide, but the excise tax on this product have proven to be more cost-effective and reduce the overall consumption of these products.[13]

The economic cost associated with smoking is more than $1.4 trillion globally, while for alcohol it is 2.5% of total GDP and for obesity-related diabetes it is $670 billion.[14]

Smoking Tax

Globally the excise tax was introduced on tobacco products mainly on those manufactured products. Based on various studies conducted in High income countries reported that 10% increase in the price of tobacco, reduced consumption by 4%, while in lower to middle countries it was about 0.5%.[14] Thus, many studies showed that price increase significantly lowers mortality and morbidity. However, the impact was more profound among the youth and people from lower socioeconomic groups.[15]

In 2016, the Australian government introduced the increase in the tobacco tax by 12.5% and increased the cost of the cigarette packets by 40$ by 2020. Tobacco Tax has a significant impact on the behavior of the people and have significantly reduced the smoking incidence. [13]

Alcohol Tax

Various studies conducted in high-income countries found that increasing the price of alcoholic beverages to a significant amount can reduce the binge drinking, road traffic accident due to heavy drinking, chronic liver diseases caused by excessive drinking, cancer prevalence and many chronic illnesses can be reduced.[16]

In High-income countries the demand of alcohol reduced by 0.51 and 0.77 due to increased price while in lower-income countries it is about 0.64[16]

Food Tax

Excise tax on any items increase the price of the products and reduced the demand among the people. The food tax has been introduced since 1980s in various countries. Food taxes are implemented mainly on the sugar, salt, sugar-sweetened beverages (SSBs) and saturated fat products. Out of all the tax, sugar tax and SSBs has achieved maximum gains and impact the health benefits.[17]

The fig 1 shows the impact of the tax on the sugary beverages and its influence on the behaviour of the people, ultimately reducing the risk of overweight and obesity and NCDs.[18]

FIG 1: SSBs tax and its outcomes

Food tax across the global.

According to Cabrera Escobar and others, stated that over 26 countries in the world have been successful in implementing the excise tax on the SSBs and other unhealthy food items. [17]

Denmark was the first country who proposed the tax on the soft drinks in 1930, which was again reformed in 2014. Norway also imposed the taxes on the sugary beverages in 90s. Later, Hungary and France also implemented the taxes on the SSBs in 2011 and 2012 respectively.[19]

Mexico, became the first state in US to impose a tax on SSBs as well as on unhealthy food in 2014. One peso per litre was introduced which increase the price of the beverages by 10% and also 8% increase in the price of unhealthy food. [20] In 2015, the city of Berkeley in California implemented the tax on the SSBs by $0.01 USD, which influenced other states in the US to adopted the taxation on the SSBs.[21] Denmark and Hungary have recently introduced the tax even on the meat and dairy products with high saturated fat content.[22]

In 2016, Australian Government also imposed 20% of the tax on the sugary beverages.[23]

Effect Of The Food Tax On NCDS And Who Is Most Influenced?

In Mexico, the excise tax on the non-alcoholic beverages by 10% reduced its consumption by 9.7%, while in California it was reduced by 21%. The reduced consumption reduced the incidence of the obesity and NCDs. [20,21]

In Australia, 20% of the SSBs tax reduced the demand of it by 12.6% among the individuals. The prevalence of the obesity was reduced by 2.7% in men and 1.2% in women. [23]

FIG 2: Number of the cases reduced by the SSBs tax in Australia.

Fig 2 shows the that around 600 diabetic cases, 250 IHD and 70 Stroke cases were reduced after the implementation of the SSBs within two years. The net DALY gained due to the food tax in Australia is 470000. [23] In India, one of the studies found that SSBs taxes reduced the consumption of SSBs and the substitutes where purchases like water and milk.[24]

Thus, the food tax does influence the behaviour of the individuals toward the less consumption of the unhealthy food and beverages. However, many studies have stated that the many people due to price rise shift to other substitute with less price or other unhealthy products. As the price elasticity varies in the different parts of the world, the net impact of the food tax is less if it imposed only on particular products.

The impact of the food tax was higher among the lower socioeconomic groups. Higher group were less significantly affected due to price rise.[25] One of the Mexico study found that the food tax helped to developed healthy eating habits among the LES group people and as they are more prone to NCDs help to reduce the burden of obesity and NCDs. [20]

Economic Impact Of The Food Tax.

NCDs related to poor diet accounts for $5.3billions for the health expenditure in Australia in 2015. After food tax the net saving on the direct health cost was around $3.4billion in Australia. [26]

Food taxes have lots of other economic impact other than health cost. The food tax can affect the government revenues. The amount of the tax collected from the food and SSBs can be utilised for the other public health control strategies. For example, in Mexico the increased in the tax by 10% doubled the rate of the SSBs which reduced the consumption by 12%, but the remaining 88% tax will still be collected and can increase the revenue by 76%.[27]

The food tax can affect the food manufacturers by reducing the sale of their product and leading to economic loss. This can affect the employment of the employees in the company due to recession. This can be a trouble for the government as many food companies can oppose the food tax. But the government can employ this worker for the newer strategies implemented by them from the revenues collected from the food tax.[28]

Also, the most vulnerable group to be influenced by the food tax is the poor people and lower SE group. Due to food tax, the price of the food product increase which reduce the purchase among the LES group people. However, studies have found that the consumption of the unhealthy food and the prevalence of the NCDs was higher among them. Thus, food tax can significantly affect the health benefits among them. [28]

Though lot of the studies have been conducted on the food tax and its economic impact on the health system and health costs, but still lots need to been done to understand the impact of the taxes on the productivity and net benefits.

Action plan for the food taxes.

The program logic model designed below helps to government at national and state level to identify the resources and activities needed for the proper implementation of the food taxes.

Aim: To reduce the consumption of the unhealthy food products and beverages among the individuals by introduction of the food tax.

Objectives:

To develop the plan for implementation of the food tax at national as well as state level with the available resources and reduce the consumption of poor diet and prevalence of the NCDs in the country.

Further recommendations:

The burden of the NCDs and the obesity are raising continuously. Price is the main factor contributing to the purchase of the unhealthy food. Varieties of the taxes are been imposed on the food products like sale tax, tax on production, custom duties and excise taxes.

My Further recommendation for the food tax based on evidence are: [28,29]

1. Excise tax should be used as they have higher impact on the health benefits.
2. The excise tax should be such that there is not much difference among different brands hence the people doesn’t have much options left to chose from the cheaper brands and reduced the consumption’s
3. Tax should be imposed in such a way that food manufactured can not alter the price for better revenues.
4. Regular review and health impact should be monitored, if necessary, it should be increased for better health outcome benefits
5. The tax should be based on the ingredients rather than quantity and volume of the food products.
6. The food tax mainly affects the poor people; hence it should be taken care that they can afford the healthy food. Like in Australia the subsidies are introduced for the fruit and vegetables along with the food tax on the sugar, salt and high-density food, which switch the people to healthy buying options.
7. The increase price due to the tax can warn the people about its dangerous effect on the health, can help in the behavioural change and healthy dietary adaptations.
8. Significant increase in the price is required on certain items which are highly consumed and multiple products should be considered to left the people with no options to consume other than healthy stuff.
9. Large revenues can be collected from the tax which can be used for the various public health program for the better health outcomes.

Political influence

The strong government support is needed for the successful implementation of the food tax in the country. Many factors do influence the tax avoidance inside the government like the public disappointment with the increase tax, pressure from the food companies to avoid the tax and reduced gain of the revenues from the food products.

However, many studies have shown that food tax can significantly impact the health benefit related to obesity and NCDs. Thus, by strong support of the government and regulation for the administration of the tax, we can strongly implement the food tax and reduce the burden of the diseases related to it.[30]

Conclusion

The food tax can target the specific products which are unhealthy and can adversely affect the health outcome of the individuals. The excise tax can reduce the consumption of the unhealthy product and can reduced the prevalence of the obesity and number of the NCDs. However, this is not possible without strong political will and public support. Strict regulation and penalties need to be taken into action for proper implementation of the tax. Food tax along with the alcohol and smoking tax can significantly lower the NCDs throughout the world and also the health expenditure can be significantly reduced.

Progressive Tax Vs Flat Tax: An Essay on What Is Fairer

The federal government collects revenue from income taxes, capital gains taxes, and payroll taxes. Tax rates depend on income types. Income taxes are progressive – that is, initial dollar amounts are taxed at a lower rate and additional dollars are taxed at higher rates. Income from investments (capital gain) is taxed at a flat 15%. Payroll taxes are charged at a flat rate only on the first $113,700 an individual earns. Let’s look at the tax rates for 2012 and see how they influenced five different earners (George C. Edwards, 2012). Each administration gathers tax chargers from its residents so as to have the option to satisfy its duty of giving legitimate streets, water, sanitation offices, human services and instruction to people in general. The legislature would require billions of dollars to do every one of its obligations and it is because of the citizens’ cash that this work is finished. In this way, residents are normal and commanded by law to make good on the proper duties. They need to pay tax charges to their nearby state or region governments just as to the government in specific examples. Numerous individuals don’t care for settling tax charges, obviously. They trust that they could hush up about the entirety of their income. They feel that it isn’t reasonable for the administration to get an enormous level of their well-deserved cash. They at times think about the duty rates in different nations and feel that the measure of cash they pay is too high when contrasted with different countries.

Moreover, all said and done, charges are incredibly basic for the smooth running of a country. Without charges, the legislature would not have the option to satisfy its commitments. It is essential for us to get a legitimate point of view of why charges are inescapable. Despite the fact that we don’t care for the way that we need to leave behind our income to help the administration, regardless we need to consider this to be an advantage. Truth be told, we are paying the administration to give all the infrastructural offices that we appreciate in our day-today life. On the off chance that we can see imposes as a charge that we spend on ourselves for our own advantage, much like the cash we pay at an eatery to have a decent feast, we would think that its simpler to pay our duties without feeling the squeeze. So, paying taxes make our self a proud civilian and it helps the government to make USA a better place for living people.

The general arrangement of tax assessment in the United States is dynamic. There are three kinds of tax assessment framework, the principal being dynamic expense, the level of salary an individual (or family) pays in charges will in general increment with expanding pay. The second is backward duty, which something contrary to dynamic assessment. The last sort of tax collection is relative duty, which implies that everybody pays a similar level of expense. The US tax charging framework is obsolete as per idea of the majority of the people live in United States. Finance charges — which spread quick rising social security and medical care consumptions — basically can’t address future issues. Also, a decent expense framework would keep the duties low and reasonable. However, they ought to likewise raise enough income for the administration to run. There are numerous reasons why the US tax charging framework is uncalled for, here are a couple. And also, one more thing which shows us that US flat taxation system is fair is that it eliminates other taxes and its fairly simple.

Despite the fact that the US tax assessment framework is dynamic, each state’s duty framework is on a very basic level out of line, by taking a lot more noteworthy portion of salary from low-and middle-class salary earning families than from well off families. The nonattendance of a graduated individual annual assessment and overreliance on utilization charges aggravates this issue. Itep.org says that “State individual annual charges are commonly more dynamic than the different duties that states demand (for example property, utilization)”. Sales assesses in the states are more backward than dynamic, poor families paying just about multiple times a greater amount of their salary in these expenses than well off families, and middle-class families paying multiple times more. ITEP additionally says that States lauded as ‘low assessment’ are regularly high duty states for low-and middle-class salary families, which implies high duties are forced on the least fortunate while low on the wealthiest. As I said before this flat tax system punish low- and middle-class income earning people than that of wealthy people.

The Institution on Taxation and Economic Policy (ITEP) shows how states will control their wording to make individuals believe that the affluent compensation more than poor people, additionally shows how each state’s expense tax charging framework is uncalled for and not what the United States tax charging framework says it runs on. US charge framework is out of line since anybody under the top 1% settle more duty and that any persevering individual has an excessive amount of duty deducted from their check leaving them with nothing to live on. From the measurements given above and other data we realize that the rich compensation is nothing from their check, consequently amassing billions while the lower classes are making around $30,000 – $70,000 if fortunate. In spite of the fact that the United States government says that us the public run-on dynamic exhausting procedures, which expresses that the well-off pay more than poor people, the state tax assessment process is totally extraordinary with regards to acquiring merchandise from stores and online sites. In undercover this flat tax system benefits rich. For an example if a person earns $10,000 while the other makes $100,000. Both the people live in a taxation system where the flat tax system rate is 10%. While first person getting $9,000 remaining after taxation and the other will get $90,000 after paying tax charges. Do you think it’s fair enough? This proves that United states flat tax system remains rich as rich and poor as poor even for the future.

As United States of America is consisting of many states few are using the flat tax system at the moment and the rest of the states are using progressive tax system which is much more fair then that of flat tax system as flat tax system support rich to be progressive tax system works in a fair manner as people who make low amount of money will pay a low amount and the rich will pay an amount which is fair for their level of earning income. State which still using flat tax system are Colorado, Illinois, Indiana, Massachusetts, Michigan, North Carolina, Pennsylvania and the rest of the states are using the progressive tax system. A Flat tax framework is the place all citizens pay tax as the government considers they are making the same amount of income. This tax charging framework is reasonable while the individuals who don’t think that it’s a terrible circumstance particularly for the lower salary class. While the US receives a dynamic assessment of tax framework, there are different nations on the planet who have forced a level duty rate framework on the two people and organizations. Estonia, Lithuania and Latvia have all accomplished financial development since changing to the framework. Estonia embraced the flat tax framework in 1994 and put a 26% duty on both individual and corporate salary. The nation encountered a 11.7 percent (GDP) development in 1997 which ceaselessly developed somewhere in the range of 7 and 10 percent all through the mid-2000s. Of course, different elements are added as well.

In 2009, 42 percent of those documenting personal government forms paid no annual expense by any stretch of the imagination. Subsequently, the 1 percent of citizens with the most elevated assessable earnings pay around 37 percent of all the government personal duties, more than the last 95 percent of duty filers (George C. Edwards, 2012). The main 10 percent pay in excess of 70 percent of all government annual duties, while those in the last 50 percent of assessable pay about 2% (George C. Edwards, 2012). A few people feel that a dynamic assessment is the most attractive sort of tax collection on the grounds that the individuals who have the most pay higher rates. Others, in any case, have proposed a ‘level’ charge, with everybody exhausted at a similar rate; still others have recommended that we desert the annual expense and depend on a national deals charge, much like the business assesses in many states. It is anything but difficult to censure the annual assessment yet hard to get concurrence on a substitution (George C. Edwards, 2012). The personal expense is dynamic in that those with higher earnings commonly pay a higher pace of assessments. A many people would likely think that it’s uncalled for to pay charges at a similar rate as a mogul. In the event that a uniform expense rate was set at a level that everybody could stand to pay, it would need to be set exceptionally low. For this situation there may not be adequate incomes to finance basic government programs.

Mainly one positive point of using progressive taxation system is every single civilian can invest their money in their own country for its wellness. An arrangement of progressive tax assessment makes it possible for all family units to add to the welfare of their nation here and there. In spite of the fact that the commitments might be insignificant, the way toward paying expenses still makes a customized assumption into their citizenship. Simultaneously, genuine incomes can be created through duties charged inside the upper expense sections. It makes a type of balance through energy, regardless of whether financially, two family units are exceptionally far separated from one another. Low-pay workers battle to have the estimation of their pay have an effect inside their lifestyle. An arrangement of dynamic tax collection animates the economy more since it can improve the impacts of development while lessening the impacts of downturn. That permits lower pay workers to extend their cash more distant than in different frameworks of tax collection. In other words, progressive tax method improves the spending power of the whole country.

Also, progressive tax system makes the public feel that the tax is not a huge thing to consider in their day today life expenses. That’s because progressive tax charging method is all about paying tax in an ongoing method. Moreover, that means for an example when we are purchasing a good or a service, we are paying the tax along with the price tag, so majority of the time people won’t consider it as a huge expense which make them feel uneasy, unlike flat tax system which people have to pay that as a monthly payment to the federal government. Same as flat tax even progressive tax system has some negative points which people do consider. They are, it creates reasons to reduce taxable income, it costs more to apply than implementing flat tax system. The arrangement of sections that is utilized in the United States makes a tax charging framework which boosts certain buys or financial exercises. By diminishing assessable salary levels, motivations are made to abstain from paying charges inside the section of the genuine pay earned. The quantity of expense findings or exclusions that were accessible in the 2017 require very nearly 74,000 pages of documentation to audit to guarantee every one taken is in consistence. Also, inequity among people is a rising problem as of starting progressive tax system, as I said before some rich people will pay a lot of tax from their income while some middle class and poor people will pay nothing at all if this system start to work.

Moreover, progressive tax charging system will be considered as a payback or a method of torturing and punishing people who work hard on their jobs. And later on, which will make them demotivate to work on their jobs as they did before. A rise in income when we work hard being taxed by federal laws is not a good thing for people who are millionaires and billionaires. As of an idea about progressive taxation system it’s considered as a way of social improvement among economists which is practical enough. After comparing about flat tax system and progressive taxation systems and their merits and their demerits, progressive taxation system is fair enough and perfectly matching for United States as of considering above information stated. Also, progressive taxation is now being used in many states in USA at the moment. South Africa is a good example for a country using progressive taxation system and it’s the country which have the highest growth in tax reserves in their government world-wide.

At last, a U.S. study from the National Bureau of Economic Research inspected the impact of assessments on the pay of individual business people and its effect on their venture choices. The creators gauge that a 5% ascend in minimal duty rates decreases the extent of business visionaries making new ventures by 10.4% and cuts speculation spending by 9.9%. High dynamic annual duty rates in this manner deflect business people from participating in more noteworthy capital spending. These discussions at some point disregard that the U.S. government charge progressive tax as of now its dynamic. Under current law, high-salary citizens pay a bigger portion of the taxation rate, while lower-and middle class pay people shoulder a generally smaller taxation rate. This is genuine both for government annual assessments and the administrative duty code generally. Besides, such a high-rate, restricted base proposition is probably not going to produce a lot of income (Robert Bellafiore-2019). With regards to pay tax, there is a solid case for keeping things straightforward: separate payroll costs with a stipend and multiple rates specified, combined with a single benefit to help those with low wages or potentially high needs. The plan of the rate calendar ought to mirror the best accessible proof on how responsive individuals at various salary levels and with various statistic qualities are.

Pay from all sources ought to be burdened by a similar rate plan. In any case, not at all like a standard personal duty, our methodology would permit all expenses of producing that salary to be deducted, as we clarify underneath. Applying various rates to various salary sources muddles the framework, unreasonably supports those burdened all the more daintily, misshapes financial movement towards delicately exhausted structures, and encourages charge evasion. Burdening pay from all sources similarly doesn’t simply mean exhausting incidental advantages similarly as money profit. It likewise implies applying that equivalent rate calendar to, entomb alia, independent work pay, property pay, reserve funds pay, profits, and capital additions. Under the ability-to-pay principle, tax burdens should be related not to what taxpayers receive from government, but rather to their ability to bear the tax burden—that is, to tolerate a sacrifice. Reasoning from the plausible, but unprovable, idea that paying a dollar is a lesser sacrifice for a well-to-do person than for a poor person, an equal sacrifice requires higher tax payments from the well-to-do person. But as with the benefit principle, this reasoning does not point to a particular relationship between income and tax burden. A proportionate tax, whereby everyone pays the same percent of income, would take more from the rich person than from the poor person. Even a regressive tax, with everyone paying 25 percent on the first $20,000 of income, and 10 percent on all additional income, would take more from the rich than from the poor. Yet under other assumptions about sacrifice, a steeply progressive tax system is appropriate.

A flat rate annual expense framework regards the guideline of correspondence of residents under the watchful eye of the law. The standard is the equivalent for each of the: one rate for all residents. The assessment is set at a rate that doesn’t shift dependent on wage levels, similarly as the property charge rate is uniform for all occupants of a district and doesn’t change as indicated by the estimation of a structure. After considering all this information with regarding to the Unites states federal laws, we can arrive at a conclusion that progressive taxation system is more friendly to all the people in an average who wish to live an easy life with no trouble. Why most of the economists and the government state that this is more of an effective way to collect money from civilians as it’s not like paying a mortgage to the government which is similar to flat tax system.

So, I assure that progressive tax system is fair than that of flat tax system and also when we consider as a country United States of America has a fair taxing system in average.

Does Scotland Need a Tourist Tax? An Essay

Tourism is a critical source of income for many countries but for Scotland in particular, it is a major source of revenue. Yet a substantial part of the money made from tourism does not go to the local council or benefit the whole population. Instead, the money is going into the hands of accommodation providers, cafes, restaurants and retail outlets. The government has to pay to repair and build new roads and bridges, maintain schools and hospitals and keep free museums, libraries and art galleries open, not to mention parks, footpaths and cycleways. So, who pays? Local people pay council tax to give the government money to help finance these local amenities. But we constantly hear that they do not have enough money for all the facilities and services that we expect. Since visitors benefit from all these services, is it not logical to suggest that they contribute too?

Councilors in Edinburgh have voted in favor of a tourist tax. If it comes into being, (it could take up to a year for the proposal to pass through parliament) Edinburgh will be the first place in Scotland to have such a tax. Other countries such as The Netherlands, Spain, Greece and Germany have successfully had a tourist tax for a while. So, should Scotland follow in their footsteps? Amsterdam, for instance, has quite a high tourist tax: in the center, the cost can be up to £10 added to the hotel bill. This seems like a great deal of money but in reality, staying seven nights would only be £1.40 each day. This sum equates to a cup of coffee or a sticky bun, which no holidaymaker begrudges. When tourists stay in hotels or B&Bs they use hot water for showers and baths, heating for their room, the Internet and electricity for the television/ lights. But is that all covered for by their hotel bills at the end of their stay? Most likely not and the hotel or B&B has to find an extra source of money for the end of month bills. Not all tourists, but some definitely try to abuse these amenities by spending longer in the hot shower than they would at home and also extra rolls and cold meat at breakfast for lunch as they think they can just take it because it’s not them who has to pay for the extra things at the end of the day; they just expect that it’s all included in the price they pay for the room. So, if tourists paid a little bit extra this money could go into the community and aid the hotel/B&B owners.

On the other hand, tourists may be put off by paying a tourist tax. They already pay for travel and hotel plus daily extra snacks and coffees and also a small souvenir to remember their holiday, so they may think they are already paying enough. Why should they pay anymore? Hotels trade group UK Hospitality has warned that a transient visitor levy – or tourist tax – could cost the Scottish economy £175 million. Highland hotelier Sheena Fleming, owner of the Gun Lodge Hotel in Ardersier said: “I am surprised and disappointed that this could be a possibility. I feel that customers already pay a premium to come up to the Highlands so why would we want to charge more? We should be encouraging more tourists not deterring them”. Actually, I do not agree with this opinion. Frankly, if they cannot afford to pay, they should be questioning whether they can afford to be going on holiday at all. Last year 4.26 million visitors stayed 15.63 million nights in Edinburgh. If they all stayed a maximum of seven nights, a tourist tax would raise more than £30 million. Imagine what that would do. That money, Edinburgh says, would be used to increase spending where tourism puts the city’s infrastructure under strain.

Could it be that the real resistance from tourist businesses is that they do not want to bear the extra administration costs nor the increase in paperwork? Bureaucracy is expensive.

In Scotland, all roads are free. There are no toll roads or bridges. Tourists damage the roads just as much as domestic users but we who live here have to pay for road maintenance through council tax. In Sweden, there is a system in place in which tourists travelling on Swedish roads and bridges have to pay a fee, in order that the Swedish government can afford to repair and keep the roads maintained. The roads in Scotland are in some state, especially in the rural highlands it is particularly worse for wear. The council are not willing to keep maintaining these minor roads and so a tourist tax would really help increase income to allow the council to keep the roads safe for tourist routes and locals who live in rural parts of the area.

For centuries, tourists have been flocking ‘over the sea to Skye’ but locals are exasperated because the island gets too crowded with the influx of cruise ships and visitors with their cars. Locals are also aggravated at the lack of parking and the crowds leading to the destruction of the natural landscape. They are further irritated that tourists and those from the cruise ships spend next to nothing during their ‘lightning trip’ of the island. A Scottish Government spokesman said that £6 million would be invested to help ensure the facilities for tourists are in place. Rodger Booth said: “Even £1 a person, I am sure people wouldn’t complain. It would be put into the island’s economy for better toilets, better waste facilities, better parking facilities and better roads”. If you look at other countries that have introduced a tourist tax, visitors there have kept going, it hasn’t stopped them. In fact, they know by paying a few pounds extra into the area they will get better facilities and better attractions.

Another huge problem is the North Coast 500, which has had a lot of advertisement recently causing a big influx of tourists coming to travel this route. Although the number of people has caused many facilities including toilets and roads to be unmaintained. For example, roads on this route have deteriorated and are not kept safe. Also, probably the most vital facility available that is a must on a road trip (toilets) is missing most of the way. So, if this route stays busy and keeps going on like this, it is not sustainable and will be very unsafe and will not provide the cleanest facilities tourists will be inclined to stop coming.

We in Scotland can see a problem. There is a suggested solution. We must embrace it. I believe tourism tax is a real benefit and I feel it would not just have an impact on the locals but everyone involved with the country and visiting it. It could increase the national income a lot and help to improve Scotland’s appearance and facilities. Other countries have introduced this and so far it has mostly been positive. If we do introduce it here in Scotland imagine the council tax could be lowered, If the tax were to be brought about maybe the local council tax might be reduced and that would benefit a great number of people. Plus, our roads could be hugely improved with fewer potholes and more dual carriageways. If we really think about the negatives yes people will try to find the drawbacks about it but is it really a bad thing? No, as we wouldn’t have to pay anymore and increase and improve our country’s appearance. So why would we make such a fuss over something that is obviously only going to benefit all of us? Can we not just go for it?

Should Australia Introduce a Sugar Tax to Improve the Health of Its Population? Essay

Implementing tax on sugar-sweetened beverages was correlated with substantial increase in soda rates and decrease significant consumption of aerated drinks, sweet teas, flavored water, and sport drinks. In Australia people are getting fat since childhood caused by eating too much unhealthy processed food which address complex disease called obesity. World Health Organization (WHO) suggests that obesity is a risk factor for most of non-communicable disease such as type 2 diabetes, cardiovascular disease (heart attack, stroke, hypertension), cancer etc. To improve public health in Australia, Australian Medical Association (AMA) announced sugar tax as priority in their health policies due to high rate to obese population as major concern. The impact of a tax on SSB in 2017-18.67% of adolescents were obese (12.5 million people), scale raise from 63.4% in 2014-15 (Australian Bureau of Statistics, 2018). In this essay, attempt to argue that foreign countries have already pre-taxed sugary products which leads intake reduction and demonstrated some cardiometabolic life risk factors. On the other hand, government followed subsides according to their guideline meanwhile, taxation shows some negative consequences on Australian government and raise financial burden.

A reduction in SSB consumption could save health care treatments cost for Californians associated with diabetes or obesity outcomes by adopting tax on sugar products such as drinks whereas few research have investigated health consequences which has been corelated due to the effect of tax a way of lowering intake. In addition, sugar intake dropped down in US especially people from Californian such as African Americans, Mexicans Americans and whites their daily calorie intake are 9%, 8% and 5% respectively. According to Mekonnen et al. (2013), US implicit price elasticity an excise tax in 12-ounce drink at pre-tax level of $1.00 will be projected to increase the quality of product by 12% and result in reduction of 9.5% to 12% in sale of such drinks. For instance, 32 ounces of soda at pre-tax level of $1.00 will raise the quality by 32%, and since demand elasticity accepted in 20-30% decrease intake. To conclude that effect of penny per ounce tax may result in 10%-20% reduction in SSB consumption (Mekonnen et al., 2013). However, observational and intervention studies demonstrated that high SSB intake linked to greater risk to cardiometabolic outcomes associated with diabetes, body mass index (BMI) and blood pressure.

Various behavioral and biological pathways may be responsible for correlation between SSB ingestion and negative health effects which is impacting all age groups. Childhood obesity is considered to raise the likelihood of obesity in adulthood which can have significant implications later in life. In addition, epidemiological research has demonstrated that overweight and obesity continuity factors for type 2 diabetes (T2DM), cardiovascular disease (CVD), cancer and premature death (Hu, 2008). As per evidence by Malik et at. (2010, pg.5) illustrated that higher amount of sweetened drinks leads to the development of hypertension, adverse lipid parameters, inflammations, and clinical CHD. For example, individual consume less than 1 soft drink per day has 22% high incidence of hypertension rather than non-consumers (Malik et al., 2010, pg.5).

Australian Institute of Health and Welfare (AIHW) claims that medical cost is based on Disease Cost and Effect Report (DCIS), recommend that health care cost should paid by individual until 30-year-old up to some amount include pharmaceuticals, medical services, practitioners and health professionals. To begin with, Lal et al. (2017) suggested that increase in SSB tax in Australia by 20% may lead significant saving across health care cost. Statistical analysis by Colagiuri et al. (2010, p.261) demonstrated that annual cost per person will estimate by direct health care, direct non health care and government subsidies depend on persons weight differences from 1999-2000 to 2004-2005 provide prevalence about >30 age covered by government subsides. For instance, annually government pay was $3600 which increases from $2948 for overweight and obese (Colagiuri et al., 2010, p.261). Above all, government faces major problematic concern about expenditure related to medication or hospitalization.

Taxing SSB in Australia address the market failure because government excess responsibility mainly on producers and consumers to pay negative consequences of the production and intake. Individual is not likely to bear full amount of their consumption of non-nutritional food or drinks because most health treatment costs provided by government as well as provide safety to obese people who are under-employed, unemployed or disabled. Additionally, government should increase the distribution of nutritious food under regulation and guidelines into market rather than increasing tax on sugary food which increment into retail price to the social cost put more simply obesity crisis creates huge pressure on government due to the fact that Australian government owe one-third cost of their products which is imposing tax on goods or services may lead burden on government (Duckett, Swerissen, & Wiltshire, 2016, p.22).