What are the principles of taxation?
The generally accepted principles that apply to any system of taxation are: • Equity – the principle that taxpayers of similar financial means should pay similar amounts of tax, and taxpayers of greater financial means than others should pay a proportionately greater amount of tax. • Benefit – the concept that there should be some relationship between the tax paid and the benefits received. • Capacity to pay – requires that some consideration be given to the ability of the taxpayer to pay the tax because no single measure of financial means can provide an absolutely reliable guide to the circumstances of individual taxpayers. • Efficiency – i.e. does the tax produce desired results (if any). If the tax is being imposed to raise revenue without changing taxpayers’ economic behaviour but it has this effect then the tax is inefficient. • Simplicity – refers to the extent to which the tax is readily understood and accepted, its certainty of application, and its ease of collection. To some
