Canons Of Taxation
Canons of Taxation, the rules or aims advocated by economists at various times for designing an ideal system of taxation. Adam Smith's (in The Wealth of Nations) were four: equality (according to individual ability to pay), certainty, convenience and economy. On economy he said: 'Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the state': it should not require 'a great number of officers', 'it may ... dis-courage the people from applying to certain branches of business which might give maintenance and employment to great multitudes', 'it may frequently ruin. . by forfeitures and other penalties. . those unfortunate individuals who attempt unsuccessfully to evade the tax', and it should not 'subject the people to the frequent visits and the odious examination of the tax-gatherer and so expose them to much unnecessary trouble, vexation and oppression.
In our day, when in Britain taxation takes 40 per cent of incomes, the emphasis is not only on simplicity, efficiency, ease of collection and 'fairness' but also on avoiding discouragement to effort, industry and output. Economists would generally agree that beyond a point the use of taxation to redistribute income conflicts with its effects in inhibiting the growth in total incomes, although they differ on the points at which the conflict emerges in different taxes.
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