How We can Make Best Tax Policy.

Most of the people have one kind of similar habit that if somebody wants to know about something new matter, then they start to search and read about a matter which was written by some renown writer, professor and researcher. It is a good way to find reality but some matter we can go deep own self rather than through an already written book. So, I am going to describe tax in deeply by using simple example.

There is one country, where 20 people, have been living, among them 5 people are government staff, one is prime minister, one is police, one is army and 2 are government officer and rest people are normal citizens. Among those citizens person, A has a farming land. So, person A has been farming rice and 10 people have been given work to his firming. After 3 months person A has got 8000 kg of rice from farming. Every worker has got 200 kg of rice as a wage of work. Here other 9 people also need rice but they didn’t work in his farming, if they don’t get rice, they cannot run their life. Here 4 people are living without getting work, 5 people are working for the government, those people also need the same rice, they don’t have other option. To solve this kind of situation, the tax was applied in the past and so many different types of taxation have been applied in different countries, those all developed form of taxation was originated from the same situation. In this small country, they applied tax 30% of total rice, then the government has got 2400 kg rice as a tax. 5 government staffs have been given 300 kg of rice each person as a salary. Government need to make one small road, so 4 persons who had not got work in farming. They have been given work for making a road by the government and they have been given 200 kg rice each of them as wages. Now everybody gets rice somebody gets by doing directly work in farming somebody gets through government tax. If we deeply observe here, everything of tax-related matter we can get. If government applied more than 30% tax upon farming, next year he may not motive to farming or if government applied less than 30%, then the government couldn’t make the road, as well as all citizens, couldn’t get necessary rice.

 

So, tax is necessary to run any country, without tax government cannot do any work. The tax must be paid by all citizens who have got benefit from economic activities. The tax also has played a role to minimize the inequality among the citizens. By using tax the government should pay the regular running cost and should make the necessary infrastructures as well. We can see so many types of tax are used in the country. But, my opinion about business tax is different than others. Normally we can see sales tax, VAT, capital gain tax, profit tax, dividend tax etc. whatever tax is applied upon businesses finally our main purpose is that necessary tax must be collected from businesses. Then why we should make so complicated by applying so many taxations, it is not necessary. If sale tax, VAT and capital gain tax are not applied, then profit would be increased, after increase profit then profit tax would be increased. So, it is no matter what kind of tax applied. By applying only profit tax also can collect tax from businesses. By applying sales tax and VAT, products are being expensive for all citizens, so many jobless people also compel to pay tax through sale tax and VAT that’s why it is not a progressive tax style. So, I kindly request to all tax expertise around the world, before applying any tax upon economy activities please understand the root of tax and necessary and make progressive tax like if profit increase, the tax rate would be increased otherwise jobless and poor people also compel to pay tax by making wrong taxation policy upon the businesses. If government need more money, the government can increase the profit tax rate, nowadays economists are discussing environmental tax, why we should make so many taxation types just we can increase profit tax rate then more money should be paid by businesses and that extra money can use on environmental areas. So, we should not need and introduce any new tax type. And also, not need any study and research that which country has applied what kinds of taxations. All kind of taxation final purpose is that money must be collected from economy activities either applying one tax or more tax. If we apply only profit tax on business then the profit tax rate would be increased. What is the problem here? Nothing. And another hand, in my opinion, dividend tax, must be high, profit may be used to expand the business but dividend goes to the shareholder pocket that’s why tax rate must be applied high rate on the dividend. So by understanding the root of taxation and necessary of tax, then we can make the best tax policy without study and research.

 

Thank You For Reading.