Category: Tax

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?

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).

In America today, there is a constant conversation about taxing the rich. They’re arguments on both sides of the coin. As of right now, since taxes are based on percentages, wealthy citizens should not be required to pay higher taxes because they fairly earned their money and they should get to keep it. On the other hand, some people believe that wealthy people should pay more taxes because they already have plenty of money so it is nothing when they pay extra. People should be taxed on consumption, not on income. What I mean by this is, if you spend more, you pay more. A consumption tax, taxes people when they spend money. However, income tax taxes people on how much money they make.

When tax rates go up, it usually has a negative effect on the economy, since people have far less money to spend and invest. Larger tax changes do not always lead to larger economic effects. In general, it is impossible to predict the long-run economic effect of a tax change by looking at how much revenue it raises or loses. This is because the economic effects of a tax change are driven primarily by a change in the total cost of tax rates. The rich shouldn’t have to pay extremely high tax rates because they already take risks to invest which does supply jobs to people, and carry the load of taxes in America. For example, there are two people who run a lemonade stand, John who works two hours, and Jim who works four. They decide to make an improvement to the stand that will cost two dollars. When they are deciding how to pay for it, John says that Jim should pay 1. 40 cents while John would pay 60 cents. John comes to this conclusion because Jim has more money to contribute from working longer. This isn’t fair because they did the same work on the lemonade stand but the person who worked more is punished. The article states, “Further, this means that tax hikes often do not have the intended effect of raising more revenue. If high taxes slow down economic growth, the government ends up taxing a smaller amount of money at a higher rate. Sometimes, this means a tax hike actually leads to lower total revenues, but even in less extreme cases, tax hikes yield diminishing returns” (Andrew Vitell). This shows, that even though we can’t know exactly how the economy will be affected by these changes, we can assume a lot of what is going to happen by looking at past experiences. If people have extra money to spend, they most likely will, which in turn positively affects the economy.

Simply raising the top tax bracket would aggravate a well-recognized problem with the current tax system. For that reason, an increase in the top-bracket rate should, and almost certainly would, be combined with other measures. When you put money into a 401k or IRA, you are not taxed on the contribution (the seed), and you pay taxes on the seed AND the growth when you take the money out in retirement (the harvest). The theory being that you will have less income in retirement and be in a lower tax bracket on which to tax the distribution. For example, you contribute $2.00 to a pre-tax savings account and you don’t pay tax on the $2.00. Let’s assume that $2.00 grows to $5.00 by the time you retire, and you take the money out. You pay tax on the $5.00. Currently, the highest income 1 percent of all filers gain slightly more income from capital gains and dividends than they do from wages and salaries. The gap between tax rates on various forms of income is preposterous. The current system encourages people to go to considerable effort to convert more-highly-taxed wages and salaries into capital gains or dividends. The article states, “Increasing taxes for the wealthiest is socially divisive and encourages a class war situation where the poor and middle class begins to resent the rich, and the rich, who find themselves paying an increasing share of the tax bill, resent the poor and the middle class in return” (Paul Goodman). This proves that for society to remain functional and fair, the rules that make up the tax system can’t dramatically change without clear phase in plans in order for the systems to shift with changing policy.

All in all, taxes are a very controversial topic and people have very strong beliefs when it comes to the subject. Raising taxes has been historically proven to have a negative effect on the economy. Taxes laws need to stay consistent to ensure an operating economy and tax laws need to stay with what works. Tax at seed or tax at harvest, with clearly defined taxation for all income classes you enable tax systems can support the needed funding to help grow economic development in a fair way.

In this essay I’m going to be discussing the following: why the government has introduced a sugar tax and the results of this initiative, future plans to increase this scheme as well as potential alternate methods to improving the nation’s health without punishing the consumer.

The government last year joined the ranks of many other nations around the world in introducing what has been dubbed the ‘sugar tax’, joining the ‘sin taxes’ that are already currently in place. This new one however currently only targets sugary drinks like fizzy drinks. All fruit juices with no added sugar and drinks with high milk content are exempt. Its official name is the Soft Drinks Industry Levy. This was originally introduced in Apr 2018 as an attempt to mitigate childhood obesity. With the levy now in place, this gave the producers a choice of either reducing the sugar content to avoid paying the levy or passing the cost of the levy onto the consumer.

The government is targeting sugary drinks as a starting point, this is because one in ten children are obese by the age of five, this later rises to one in five by the age of 11. These figures put a scary reality on the situation regarding national health. These alarming figures are the results from a survey conducted by the Health Survey for England in 2017 which also found an alarming increase in obesity in adults. It is this survey and many protests from health campaigners that has sparked the initiative.

While the government have already made pretty big steps since introducing the Levy in an attempt to mitigate young people from purchasing these products including removing advertisements during prime-time television. There is still a lot of work the government is yet to do. Just recently the government have been pressured by campaigners to impose a ‘calorie tax’ on unhealthy foods such as sweets and desserts.

The government can do all they can with all the power they have and yet, one can be assured that the general public will still choose to consume the unhealthier food over the more nutritious choice due to a few factors. The first and most popular reason is the taste. The majority of the population consider taste to be the defining factor when it comes to food choice. People choose to pay extra for a high sugar food than a low sugar food as they don’t like the taste of artificial sweeteners. Whilst the levy may have little to no effect on the consumer, it had made immediate effect on the producers when it was first introduced in April 2018. Companies including Britvic and Oasis started actions to reduce added sugar content almost immediately after rumors of the Levy were first initiated. So far, the initiative has removed an estimated 90 million kg of sugar from the nations diet.

Whilst there is not much more the government can do without upsetting the UK population by increasing the over the till price on other unhealthy products, they can back schemes to increase education on the matter in schools. The best place to start of course is primary schools. Many years ago, as a child in primary school we were tasked with a project to research the impact on smoking. It was this project that put me off smoking completely, I didn’t even want to try one, thankfully neither did my brother. This was despite the fact that both our parents were heavy smokers. Whether or not this project was part of a government backed initiative to reduce smoking amongst young people and teenagers I am not sure however it did go a long way into me making the choice to not pick up smoking.

The government should not be focusing on taxing the consumer on unhealthy dietary choices, but should be looking for alternative methods of reducing obesity within the UK. However, if they were to focus on the tax of these unhealthy food choices, then perhaps they should reduce the tax on the healthier choices at the same time. This would help matters massively as a 2014 Cambridge University study found that it’s three times more expensive to eat healthy than unhealthy.

One of the most important questions that has to be raised is whether it is right or even ethical for smokers to pay a high amount of tax on tobacco or not. Or even whether individuals who live a healthy lifestyle and don’t smoke are forced to pay a cost for something that they never even did. There are 3 reasons as to why, in my opinion, smokers should pay an extremely high tax on tobacco.

Firstly, the most obvious one is that raising taxes on tobacco is the most effective policy to reduce tobacco use. Raising taxes on tobacco would then obviously make tobacco more expensive. And the very basic and logical thing is that consumers tend to buy less of something or the demand of a product would decrease once the price of the product increases and then it becomes less affordable which then decreases consumers purchasing power. On average, raising tobacco taxes to increase prices by 10% is estimated to reduce tobacco use by 4% in high-income countries and by around 5% in low- and middle-income countries. Also, low-income consumers wouldn’t have the urge to buy a high taxed product. A 2010 study undertaken in 20 lower-middle income countries found that a price increase of 10% would reduce consumption in youth aged 14 by 18%, more than three times higher than the consumption reduction achieved by the same measure among adults. A recent action has been taken in turkey about the impact of tobacco taxation and other concerns. Taxes there have been increasing such as advertisements regarding banning smoking and tobacco use. This led to a decrease in the sales of tobacco by 12% between 2008 and 2012.

Another reason as to why raising taxes should be implemented on tobacco is due to the fact that it saves lives. The decrease in consumption would improve the health of the community which later reduces the burden of having lung cancer and death in the world. World health organization calculates that if all countries increased taxes on cigarette packs by 50%, there would be 49 million fewer smokers and this would prevent 11 million deaths from occurring. Only one year after a smoker quits smoking, the risk of him/her getting coronary heart disease will drop drastically. Also, just ten years after quitting, the chance of getting lung cancer will fall to about half that of a smoker. An example would be given which is France. Between the early 1990s and 2005, France increased its taxes substantially which tripled the prices of cigarettes, and then sales were reduced heavily. A few years later they figured that there was a reduction in lung cancer death rates. and ever since these results occurred, France has started to regularly increase tobacco taxes since 2010. Adding to this point as well, if smokers continue doing what they’re doing which is to consume a tremendous number of cigarettes in a day, then second hand smokers would get affected. People who smoke would not only affect one’s who they’re surrounded by, but also animals that they own, with the environment that we barely take into consideration. Non-smokers shouldn’t pay the same price as smokers. because when non-smokers are surrounded by smokers, firstly they’d be called second hand smokers and that’s when they get affected as much as smokers and even more than them. So, once they get affected by the smoker’s decision of smoking the cigarettes, they’d be paying for a price that they never wanted to pay in the first place.

And third, raising taxes on tobacco generates more revenues for the government. Once the amount of cigarette consumption decreases then government would start paying less towards the environmental damage that would occur if smokers didn’t have to pay a health tax. So, technically tax increases are a win situation because they’re good not only for public health but also for government revenues. World health organization estimates that if countries increased tobacco taxes by 50% per pack, governments around the world would earn an extra US$ 101 billion in revenue that could be put towards health and other social programs such as for example building more eco-friendly things. So not only would the government reduce its spending on global warming and environmental damage that would occur from smoking but it would gain direct revenue from the tax that it’ll be implementing.

Adding to imposing taxes on tobacco, a question that isn’t often taken into consideration is whether it is fair for people who live a healthy lifestyle should pay the same health premiums as those individuals who live an unhealthy one. Those who smoke should pay higher taxes for their health care since we all know that smoking leads to a greater number of health issues therefore needing services for healthcare more than the non-smoker would, so them paying more than the ones who live a healthy lifestyle should only be reasonable and logical. Therefore, if the smokers paid higher taxes, they would cover some of the health care costs they might accumulate and free up money for a variety of other issues.

To sum it up, smoking has a lot of indirect costs to society and the non-smoking public which I mentioned earlier that are costs of second-hand smoking, or even costs to employers in the form of productivity and absenteeism of smokers who are trying to recover from an illness that was due smoking these cigarettes. In addition to the indirect costs there exists to be negative externalities of smoking to society which consist of smoking-induced fires all the way to sicknesses and littering. These costs could be measured and are called tangible. There are other costs which can’t be quantified or measured, thus calling these costs intangible costs of smoking. These costs consist of a loss of life or the pain and the suffering of a person who is hurting from lung cancer or any other disease that might be due to cigarette consumption. By implementing the tax, the money that’s gotten from that could be beneficial in many ways such as funding researching for not yet curable illnesses and diseases such as AIDS and cancer all the way to even support the orphans by providing them with food and shelter.

In conclusion, I believe that the tax on cigarettes is a great idea since as I’ve mentioned earlier that it is the most effective policy to reduce tobacco use, it saves so many lives along with the fact that it would generate more revenues for the government, which could then be used for research purposes or even in order to enhance the economy’s well-being whether it would be from an environmental aspect all the way to the benefits that each individual in the community might get.

Many organizations are benefiting from us. They are promoting a lot of unhealthy food at a very low price, taking benefit from it by having us to agree with a ridiculous idea that it’s good for us to purchase these unhealthy products. Big Food Brands like Anheuser Busch, Nestlé, and PepsiCo are responsible for using this tactic manipulating people of America to buy extra of their products. With so many of these unhealthy options at an alarmingly low fee, they are causing risk to get diabetes, obesity and reducing life expectancy more common. By taxing unhealthy foods no longer will it decrease the fitness problems, however, it will train children to make smarter eating choices. We can start helping by taxing sodas, unhealthy breakfast, lunch, dinner, snacks, etc.

Many corporations are making unhealthy food at an extremely low fee and promoting it causing humans to overbuy and to over-consume the items. In the article ‘Bad Food? Tax It’ by Mark Bittman states: “The food industries are incapable of marketing healthy food but instead continuing to sell the health-damaging food that is more profitable”. This shows not only is this showing us how corporations are only questioning enterprise however it on how they are strategically attempting to get us to devour extra of their goods. By making it tastier with added sugars and preservatives making it seem more appealing than the healthy foods with not much flavor or health benefits.

In the article, ‘Attacking the Obesity Epidemic by First Figuring Out Its Cause’ by Jane E. Brody states: “The 1970s saw a striking rise in the number of refined carbohydrates and fats. Energy intake rose because of environmental push factors i.e., increasingly available, cheap, tasty, highly promoted obesogenic foods”. This is a hassle because unhealthy food has solely been getting bigger and more efficient making food for the American people more available and cheaper as well.

The solution to this problem would be to tax all the unhealthy foods starting with drinks and foods including unhealthy breakfast, lunch, dinner, and snacks. The article ‘Bad Food? Tax It’ by Mark Bittman said, “A 20% increase in the price of sugary drinks nationally can result in a 20% decrease in consumption, which in the next decade could prevent 1.5 million Americans from being obese”. This supports that even the slightest change could help in the long run with this epidemic on cheap bad food. As well in the article ‘Bad Food? Tax It’ by Mark Bittman states that “taxes become significant at the equivalent of about a penny an ounce, a level at which very good things start to happen, from the decrease of consumption of sugar-sweetened beverages, the incident of disease and public health cost”. This even further supports the fact that if calculated correctly taxing sugary drinks, chips, and junk food altogether could help bring in money to help with other things. For example, making healthy food cheaper for low-income families instead of having them chose junk food due to it being cheaper than healthy food.

As a result, taxing unhealthy merchandise, it will assist in stopping obesity and diabetes to be less frequent in the coming generation and assisting youngsters in making more healthy choices in their life. As it states in the article, ‘No Lunch Left Behind’ by Alice Waters and Katrina Heron, they say: “After all eating well requires education, we can teach students how to choose good foods and to understand how their choices affect their health”. With the result of taxing in healthy foods, we can help kids apprehend how many unhealthy ingredients will affect them long term. And how it affects them as of now even if they/us do not see it ourselves.

In conclusion, this epidemic of taxing junk food is important. The American people as a whole can’t let big food corporations take benefits from us by making us think they are giving us called ‘healthy and good’ food options. If we don’t start discovering ways to preserve the oncoming generation’s life expectancy. It’s can lead to unhealthy and horrific lives for the oncoming generation. By taxing unhealthy drinks and breakfast, lunch, dinner, snack, etc. will make our future healthier as a whole. As well it will be helping to assist in stopping the possibilities of us getting diabetes and obesity in the future to ensure Americans as a whole learn to have a better understanding of what is good and bad that we put into our bodies.

“Nobody spends somebody else’s money as carefully as he spends his own…”, – Milton Friedman.

Taxation, a means by which governments finance their expenditures by imposing charges on citizens and corporate entities, is used according to the ACCA (2013) for one of three reasons: to raise revenue, to redistribute wealth, and to change behavior. This essay will focus on income and wealth taxation in the United States, which makes up 81% of the federal revenue (National Priorities Project, 2015). Most of the tax payer’s dollars are used for government programs that redistribute wealth. This happens through either Social Security (24%), Medicare and Medicaid (26%), or safety net programs (9%), which combined comes to a total amount of $2,282 trillion (Center on Budget and Policy Priorities, 2017). To fund these ever-expanding government programs, legislators have to constantly create new laws. Their main focus while doing so is to create a fair tax system. Meanwhile the main goal of these social welfare programs, to raise low-income households out of poverty, is not actually being achieved (Fontenot, K., Semega, J., and Kollar, M., 2018), rather it is making low-income households depended on the State (Sowell, 2012). The direct issue is that although these programs are not working, politicians do not repeal them (Friedman, 1993) even if it means bankrupting their country or state (Bandler, 2016). The goal of this research paper is to try and find a way, using scientific literature, to reform the income tax and social security system in such a way that it would work more efficiently without leaving the poor out in the cold. This paper is structured in the following way: first, it will describe and analyze the current income tax system. Secondly, it will explain and examine the welfare programs. Next, the essay will describe and study the negative income tax system, which is the first part of the tax proposal. Part four will go over and analyze the flat tax system, which is the second part of the proposal. The last part of the research paper will give the conclusion.

Currently the United States uses a progressive income tax system: as income rises, increasingly higher taxes are imposed. According to bankrate.com (2018) there are seven tax brackets: 10% (income up to $19,050), 12% ($19,051 to $77,400), 22% ($77,401 to $165,000), 24% ($165,001 to $315,000), 32% ($315,001 to $400,000), 35% ($400,001 to $600,000), and 37% ($600,001 or more). You can imagine this progressivity as a staircase. Every tax payer starts out at the bottom. When income reaches the maximum amount of a tax bracket, every dollar earned above that maximum is taxed in the new tax bracket (Shlaes, 2016). This concept means that the last dollar earned gets taxed more heavily than the first dollar. This system’s main goal is to redistribute wealth. Graphically income inequality can be shown by the Lorenz curve. This curve shows us where the wealth in a society is concentrated. This is done by splitting all income earners into ten groups. On the horizontal axis it shows the cumulated percentage of earners, and on the vertical axis it shows the cumulated percentage of their income. What the progressive tax tries to do is make the Gini-coefficient, a measure of statistical dispersion intended to represent the income or wealth distribution of a nation’s residents (0 means perfect equality, and 1 means perfect inequality), as close to zero as possible.

Welfare programs, a variety of governmental programs designed to protect citizens from the economic risks and insecurities of life, are created with the best intentions. But when government uses taxpayer’s money to help people, strange things happen according to Milton Friedman (1980). This notion that government had to protect its citizens came to be during the Great Depression. This is when FDR and some of his associates created government programs such as the social security act, unemployment benefits, and welfare payments. A side effect of these new programs was that they came with new rules and regulations. Bureaucracy started growing.

Nowadays, the Social Security Administration has almost 60,000 employees (ssa.gov, 2019), whom are dispensing other people’s money with the best possible intentions. However, these measures, made by government, often do not have the effect that was desired. In Milton Friedman’s ‘Free to Choose,’ he explains that the Welfare programs destroy people’s independence because a lot of the time a mother and her children would be financially better off on welfare programs and without a father in the house. Children whose family is on welfare will likely in their turn also live on welfare. These programs are so heavily regulated that government officials decide what the welfare recipient is allowed to do, to eat, etc. (Friedman, 1968). It also makes people afraid to apply for a job because if they were to lose the job it could take months before they are allegeable for welfare again.

The United States government is trying to find a solution to this problem. Using taxpayer’s dollars, they have created training programs. These programs that run under the governments Comprehensive Education and Training Act, have a high dropout rate (Friedman, 1980).

The motives of these government programs are good but their achievements are not. According to Milton Friedman (1980) the reason for this is because the means we have been using are bad in two respects: firstly, all these programs use one group of people to spend other people’s money on objectives created by a third group of people. Nobody has the same dedication for achieving someone else’s goals, then he has for his own objectives. Secondly, these programs have a negative moral effect on both the program’s administrators and the supposed benefactors. It gives the administrators a feeling of power while giving the benefactors a feeling of almost childlike dependence. As a result, these programs misuse money, while not achieving their objectives. Without these programs the situation would not be ideal either. Poor people would have to rely on private charity. But those people would still have their sense of self dignity, and maybe more important is the fact that we would not take away their initiatives. They themselves know better what they need than the people in Washington D.C., whom are regulating their lives right now. A community grown out of self-help is healthier than a community created by bureaucrats (Friedman, 1980).

The solution to the current welfare situation might be the negative income tax. Linke (2018) defines the negative income tax as follows: the negative income tax is a way to provide people below a certain income level with money. This would require poor people to file income tax returns just like everybody else (Friedman, 1968). In theory, this system would give people a percentage of the difference between their income and an income cutoff, or at the point where people have to start paying income taxes. Say the income cutoff is $30,000 and the negative income tax is set to 50%, then someone who makes $20,000 would receive $5,000 from the government. If a person were to make $28,000, they would receive $1,000 from the government (Linke, 2018). This concept is different from a universal basic income, which is a system where all citizens would receive a set amount of money from the government no matter what their income is (Winick, 2018). This tax system is structured in such a way that people who work will always make more money than people who do not. It is true that a person who does not make any money will receive more from the government than somebody who does, overall, the working person will have more (Linke, 2018). The negative income tax would give poor people money instead of welfare benefits. This would allow people to use the money the way they felt they had to. These payments would be distributed either weekly or monthly as to protect the poor from spending all their money instantly (Friedman, 1968).

Currently, most states have laws that dictate that if someone’s income is inadequate, they are entitled to have it supplemented and brought up to an adequate level. What is considered adequate or not is judged by the welfare agencies themselves. But more important are the effects this has on incentives. By bringing all income up to this adequate level it destroys poor people’s incentive to work. Even worse: if a law-abiding person on relief earns a dollar, his or her relief gets reduced by a dollar (Friedman, 1968). Instead, under the negative income tax there is an incentive for poor people to work and the more they made the better off they would be. According to Milton Friedman, this new tax system would be much simpler than the current system. The IRS would administer the negative income tax instead of many different organizations (Linke, 2018). In 1968, the government was spending roughly $50 billion/year on welfare programs. The negative income tax would have been superior to the welfare programs in two ways: firstly, it would use the public funds on supplementing income – not distribute the funds to various organizations and hope that it would trickle down. Secondly, it would cost far less than the current system. Christopher Green carefully estimated that the negative income tax, using the 50% tax rate, would have cost somewhere between seven and nine billion dollars (Friedman, 1968). Making it much cheaper than the current system.

The current federal income tax code is almost 10 million words and rising. This shows how complicated the current system is. The annual cost of compliance – the money, effort, and time it takes for people to prepare their taxes – is estimated by researchers at the George Mason University to be $378 billion (Forbes, 2016). Now the essay will talk about a system that would be simpler and fairer than the progressive tax system: the flat tax system. A flat tax applies a single tax rate to all levels of income. The most fundamental reason for this proposal is to simplify the system. Proponents of the flat tax even go as far as saying that the tax form could fit on the back of a postcard (Gale, 1998). The framework created by Hall and Rabushka would split the income structure into two categories: individuals and businesses. Both groups would be taxed at 19% and structuring the tax code so that each dollar of income can only be taxed once. The argument for these two groups is simple: when different forms of income are taxed at different rates, people will figure out how to take advantage of this (take deductions to the highest available rate and reporting income at the lowest available rate). Businesses will have to pay tax on all income earned, less wages paid. Under the flat tax, there is no deduction for interest paid out, meaning that investment is taxed through the operating income of a firm. The result of this is that taxing interest earned from return on investment is unnecessary. Because investment is taxed through a firm’s operating flow, an important part of the Hall-Rabushka proposal is the elimination of capital gains taxation (Teller). According to the ACCA (2013), simplicity in the tax system will produce the following benefits: lower administration costs, higher accountability, and higher stability.

“Taxation may be so high as to defeat its object… a reduction of taxation will run a better chance, than an increase, of balancing the budget”, – John Maynard Keynes.

A poll from the 1980 by Karlyn Keene, showed that the vast majority of Americans thought that flat proportional taxes were fair taxes (Shlaes, 2016). The reason for this is that the equal proportionality that comes with a single tax rate feels fairer than the progressive tax which penalizes earning more. However, it does not only feel fair it actually increases fairness. The flat tax eliminates loopholes created for special interests (Teller) and end favor seeking, special treatments, and tax breaks. This would take power away from lobbyists and big corporations (Forbes, 2016). Since economic growth appears to be more strongly linked with reducing the administrative burden on business than with cutting the taxes (ACCA, 2013), the enormous cut in compliance costs would help stimulate the economy. Investment and job creation would grow (Forbes, 2016). This tax system makes high earners have lower taxes, which will raise more revenue. Tax cuts bring back money that corporations have put overseas for example after Reagan’s tax cuts the tax revenue that was coming from the richest 1% grew 10%. A more current example is the Trump tax cut after which corporations returned $465 billion to the United States (Forbes, 2016) (Bartash, 2018). The reason behind this can be explained using the Laffer Curve: the theory that if a country’s tax rates are low, the amount of money collected by the government will increase. The idea of a flat tax rate is unpopular because when you cut taxes in a progressive tax system this necessarily means that those who are currently paying the highest taxes, the rich, will also get the largest tax cuts (Shlaes, 2016). Advocating these breaks is not a popular political move, but is our current system, in which the top 5% of income earners pays 59.58% of the total amount of income tax while the bottom 50% pays only 2.83% (York, 2017).

This research paper’s tax proposal is a combination of both the negative income tax and the flat tax. It would change the redistribution of wealth to be more effective while at the same time raise more revenue. The negative income tax part of the tax reform would get rid of the big social welfare programs, thus giving poor people more power over their own lives while at the meantime costing far less than the current welfare programs. It would ensure that every person has a basic income, while give incentive to people who want to work and earn more. Those people would no longer have to worry that they would lose their welfare benefits by getting a job. The people who are currently stuck in the welfare trap would be able to go out and contribute to society. Since this system gives people cash, instead of welfare benefits, poor people would have the opportunity to decide for themselves what they need most. The big bureaucracy in Washington D.C. would no longer be able to dictate their lives. They would have the opportunity to follow their goals. If a person were to spend their money recklessly, they would have to rely on their community or private charity. This is important because if communities are able to help their own members, since government would no longer have to step in, it would also mean a freer society. Because this system is setup in such a way as to stimulate poor people to get a job, it will also help bring people above the poverty line, which is something the current system is failing to do. The flat tax component of this proposal would simplify our income tax system: it would bring down the cost of compliance and administrative burden on people. It would increase fairness by eliminating loopholes, special interests, favor seeking, and tax breaks. Because the flat tax taxes all people that earn an amount above the income cutoff equally, this incentivizes people into earning more. They would no longer feel like the government is penalizing them for working hard. The lower tax rate would also mean, as shown by the Laffer curve, that government would receive more income from tax revenue. This system would have lower costs than the current system while at the same time generating more revenue. The government would be able to shrink down its massive debt. The negative flat income tax system is a pro-growth, business friendly tax system that provides a minimum income in a free market and for the average American it would also lower the tax burden. This tax proposal should have support from both parties. The proposal has the flat tax rate, high work incentives, and a very free market approach – which republicans want – while also providing middle- and low-income families with a tax break and giving a minimum income to all citizens, which is favored by democrats.

References

1. Bandler, A. (2016). 9 Most Bankrupt States In America: Is Yours On The List? The Dailywire. URL: https://www.dailywire.com/news/7619/9-most-bankrupt-states-america-yours-list-aaron-bandler
2. Bankrate. (2018). 2018-2019 Tax Brackets. Bankrate.com. URL: https://www.bankrate.com/finance/taxes/tax-brackets.aspx
3. Bartash, J. (2018) Repatriated Profits Total $465 Billion after Trump Tax Cuts – Leaving $2.5 Trillion Overseas. MarketWatch. URL: https://www.marketwatch.com/story/repatriated-profits-total-nearly-500-billion-after-trump-tax-cuts-2018-09-19
4. Center on Budget and Policy Priorities. (2017). Policy Basics: Where Do Our Federal Tax Dollars Go? Center on Budget and Policy Priorities. URL: https://www.cbpp.org/research/federal-budget/policy-basics-where-do-our-federal-tax-dollars-go
5. Fontenot, K., Semega, J., & Kollar, M. (2018). Income and Poverty in the United States: 2017. United States Census Bureau. URL: https://www.census.gov/content/dam/Census/library/publications/2018/demo/p60-263.pdf
6. Forbes, S. (2016) Would a Flat Tax Be More Fair? PragerU. URL: https://www.youtube.com/watch?v=dGnFcmHH7t4
7. Friedman, M. (1968). The Negative Income Tax. LibertyPen. URL: https://www.youtube.com/watch?v=xtpgkX588nM
8. Friedman, M. (1980) From Cradle to Grave. Free to Chose. Volume 4. Public Broadcasting Service. URL: https://www.youtube.com/watch?v=eJFSLACxFkk
9. Friedman, M. (1993). Why Government Is the Problem. Stanford, California. Hoover Institution Press. Essays in Public Policy, no.39. URL: https://www.hoover.org/sites/default/files/uploads/documents/friedman-government-problem-1993.pdf
10. Friedman, M. (2013). The Case for a Negative Income Tax: A View from the Right. Basic Income: An Anthology of Contemporary Research. p11-16. URL: https://s3.amazonaws.com/academia.edu.documents/51515984/BI_ANTHOLOGY_-_UNCORRECTED_PROOFS.pdf?AWSAccessKeyId=AKIAIWOWYYGZ2Y53UL3A&Expires=1548689876&Signature=L%2FDEy43tk0JI3c41R%2FJehhyKfEA%3D&response-content-disposition=inline%3B%20filename%3DBASIC_INCOME_AN_ANTHOLOGY_OF_CONTEMPORAR.pdf#page=35
11. Gale, W.G. (1998) Simple, Efficient, Fair. Or Is It? The Flat Tax in Theory and Practice. The Brookings Review. Volume 16, No. 3. P40-44. URL: https://www-jstor-org.proxy.uba.uva.nl:2443/stable/20080800?origin=crossref&sid=primo&seq=5#metadata_info_tab_contents
12. Keynes, J.M. Keynes and the Laffer Curve. Adam Smith Institute. URL: https://www.adamsmith.org/blog/tax-spending/keynes-and-the-laffer-curve
13. Linke, R. (2018) Negative income tax, explained. MIT Management Sloan School. URL: https://mitsloan.mit.edu/ideas-made-to-matter/negative-income-tax-explained
14. National Priorities Project. (2015). Federal Revenue: Where Does the Money Come From? National Priorities Project. URL: https://www.nationalpriorities.org/budget-basics/federal-budget-101/revenues/
15. Piper, J. (2013). Simplicity in the Tax System. The Association of Chartered Certified Accountants. URL: https://www.accaglobal.com/content/dam/acca/global/PDF-technical/tax-publications/tech-tp-sitts.pdf
16. Shlaes, A. (2016). Is America’s Tax System Fair? PragerU. URL: https://www.youtube.com/watch?v=junBJZRDFzk
17. Sowell, T. (1981) Poverty and Dependence. Firing Line. URL: https://www.youtube.com/watch?v=ZlsHNzp5SoM
18. Teller, L.B. The Flat Tax: An Analysis of America’s Most Controversial Tax Reform Idea. p146-155. URL: https://www.american.edu/spa/publicpurpose/upload/2011-Public-Purpose-Flat-Tax.pdf
19. The Social Security Administration. (2019) Organizational Structure of the Social Security Administration. Social Security Administration. URL: https://www.ssa.gov/org/
20. Winick, E. (2018). Universal Basic Income Had a Rough 2018. MIT Technology Review. URL: https://www.technologyreview.com/s/612640/universal-basic-income-had-a-rough-2018/
21. York, E. (2018) Summary of the Latest Federal Income Tax Data, 2017 Update. Tax Foundation. URL: https://taxfoundation.org/summary-federal-income-tax-data-2017/

Obesity has been a big problem in the UK because the government hasn’t taken control over the consumption of sugary goods, especially sugary drinks. Market failure is created when the allocative efficiency is not used in its maximum efficiency. So, when community surplus is not maximized, we have market failure. A certain product is either over or under produced. Merit goods will be under supplied, and demerit goods will be over supplied. In market failure, it’s a study about realizing the inefficiencies and design policies that can maximize the potential of the market. There are many ways to overcome market failure such as applying an indirect tax on a good. An indirect tax is charged on producers on goods and is paid by the consumer indirectly.

An externality is any effect on a third party caused by actions and transactions that don’t directly involve them. A negative externality of consumption can be defined as the cost imposed on the third party due to the consumption of something bad. Goods like that are called demerit goods. A demerit good is when what the individual consumes is considered unhealthy or socially undesirable due to the perceived negative effects on the consumers.

In a negative consumption externality, it’s generated by consumers which affects the benefits curve (the demand curve) causing it to shift to the left forming two demand curves- the MSB and the MPB. There’s the deadweight loss as the market is over-allocating the amount of sugary drinks in the market and when the sugary drinks have been produced, the cost is more than the benefit. At Q1 that’s the market equilibrium and at Q that’s the social optimum. This means that it’s not allocatively efficient. At Q is what society would want to produce but at Q1 is what’s actually produced in the market meaning the good is being overproduced. Overproduction happens because individuals don’t account for the negative externalities; only the marginal social benefit takes this into account, hence why MSB is less than MPB. Every unit someone consumes it has a negative effect on society. The consumer doesn’t take that into account as they only care about their own self-interest. If they don’t care about how the rest of society feels and what the true society benefits, they will continue to consume the sugary drinks. Therefore, self-interest underpins market failure. Sugary drinks impose high external costs on society. The overconsumption of sugar is a major cause of health problems such as diabetes, obesity and obesity-related illnesses, or tooth decay. They’re reflected in higher costs imposed on the NHS. Poor health also adversely affects work and productivity. Therefore, the social cost of sugar consumption is greater than the private cost of sugar.

A possible solution to stop the consumption of sugary drinks is for the government to apply an indirect tax. When the government imposes an indirect tax, it would shift the MSC curve upwards to MSC tax. The price for consumers would be at P2 but would reduce consumption to the socially efficient level which is Q2. There’s a very strong economic, social and personal benefit from a sugar tax. It’ll play a role in encouraging a healthier diet. At the same time raise money to deal with the rapidly rising health costs associated with obesity and excess sugar consumption. By doing this, it decreases the burden for the NHS as there would be fewer short-term illnesses in the UK. The NHS spends around £6.1bn treating obesity every year, so they would be saving money if the tax is applied. Also, this can give an opportunity for growing businesses. As the sugary drinks industry demand drops over time, there would be room to grow and promote healthier drinks which avoids the sugar tax. Although the immediate short-term impact is the loss in revenue, in the long term the business can diversify.

However, with the tax, a price raise alone will not curb consumption. With the wider range of other sugary foods available besides soft drinks, arguably the tax won’t have any effect on obesity rates at all. Also, it can be regressive, meaning it disproportionately affects low-income families so as lower income families spend a higher proportion of their income on foods and beverages, a tax will disproportionately affect them. An objective of the government is to promote equality. However, the fact that the problem of obesity is greater among low-income families, and that this increased elasticity of demand, means that they will run out of these products which justifies this regressiveness. This might not release the burden of the NHS.

Therefore, there’ll be a net welfare gain from a sugar tax with minimal economic disruption.

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

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.