TAXATION 1

WHY IS TAX IMPORTANT FOR THE COMPANY OF A COUNTRY?

The main reason any government has tax really is to manage and control the country. Think about it this way, the government through collective tax such as : Regressive tax (GST) Progressive tax (marginal personal/income tax) Proportional tax (company tax) They are able to through collecting such funds, pay for their ventures, firstly the governments requires funds to run the country, so through the revenue the collect, the pay for transfer payments, social welfare, collective, public and merit goods, such as education and healthcare. The government depending on the current state of the economy example boom or trough will make decisions on whether to have a balanced, surplus of deficit budget, following the market equilibrium concept where : T+S+M=I+X+G So, depending on market trends and economical factors, the government will allocate the funds collected via tax, to redistribute it and fund the economy. On an individual level the importance of taxes arent significant. Although it would be extremely unwise to not pay taxes the actual benefits to paying taxes are so that local, state and federal governments have a source of revenue to pay for roads, police, firemen, schools, social security, military, medicare and so forth. The importance of tax is the constitution states all taxes in the us must be uniform. So, everyone in the country must pay the same tax. A amendment was made how ever to allow for a income tax which the supreme court previously found to be unconstitutional, but the uniform tax limitation still exist. Taxes are how the government pays for everything including paycheck, food stamps, air force one, and all bills passed by congress. The importance of tax to a company, as follows : 1. Maximum social advantage 2. Minimum aggregate sacrifice 3. Efficient administrative system 4. Help in economic development 5. Universally applicable 6. Built in flexibility As a conclusion, the importance tax to the government is how the government pays and provides for all the things the society it governs wants and needs. In most all it is much more important to the society members than government. They really cant survive without it. A government, as has been done for eons, can take control by force, and use its power to take what it wants and keep it only for its benefit. AZMA DDW/5

TAXATION 1 The development of effective tax systems is a great challenge for many countries. The total tax revenue is generally low, and tax evasion is widespread. The tax bases are often very narrow, where a small number of firms contribute the greater part of the tax revenue. The informal sector is large and growing. Taxation of international business transactions has become ever more complicated to handle for local tax administrations with limited resources for employing the necessary qualified personnel. Furthermore, capital flight and tax havens contribute to undermining the tax base. It is estimated that capital outflows from Africa represent 7.6 percent of total GDP on the African continent. This implies that African countries as a group are net creditors of donor countries. Discussions of the importance of taxes for development have, until recently, been nearly completely absent. This is now changing. Taxation is about to become a central if not the central topic in the development debate also in developing countries. In August 2008, for instance, tax administrators, finance ministers and politicians from 39 African countries met in Pretoria, together with representatives of the OECD, the World Bank, IMF, and several bilateral aid organizations. The Pretoria-communiqu concludes that more effective tax systems are central for a sustainable development because they can:
mobilise the domestic tax base as a key mechanism for developing countries to escape aid or single

resource dependency
reinforce government legitimacy through promoting accountability of the government to tax-paying

citizens, effective state administration and good public financial management; and
achieve a fairer sharing of the costs and benefits of globalisation.

State authority, effectiveness, accountability and responsiveness are closely related to the ways in which governments are financed. It matters that governments tax their citizens rather than live from oil revenues and foreign aid, and it matters how they tax them. Taxation stimulates demands for representation, and an effective revenue administration is the central pillar of state capacity.

AZMA DDW/5