Taxes are legal payments made by individuals and corporations to the public budget. It serves to fulfill and secure all functions of the state.
Features of Taxes. However, it is part of the total revenues of the public budget and provides various financial resources needed by the public.
– Non-equivalent Payment – Individuals and corporations are not entitled to receive certain consideration equal to the amount of tax paid.
The basic functions of taxation:
– fiscal (or accumulation) – meaning financing for the public budget.
– Regulatory – i.e., taxes are related to a certain redistribution that ensures that the proper distribution of income generated is better spent.
– Social – This means, for example, providing certain discounts to entities that employ disabled persons.
– Criteria – This takes into account, for example, the creditworthiness of the land and is addressed by a land tax.
– Administration – This feature applies in particular to VAT.
Tax principles:
– Benefit principle,
– Taxability principle,
– Non-taxation principle.
Basic requirements for a good tax system:
– The tax system should be efficient, which means that taxes should not create significant distortions in prices or profits arising from different types of activities.
– Taxation should have a positive effect on the economic behavior of actors. Indeed, taxes should not limit people\’s work effort, willingness to save, or business risk.
– Taxes should be equitable and should guarantee a more equal distribution of income than the distribution of income arising from market conditions.
– Taxes should have an appropriate impact on aggregate macroeconomic aggregates and on macroeconomic stability.
– Legal integrity and “political transparency” should be guaranteed. That is, taxpayers should have sufficient information about where and how much tax they are actually paying.