What is convenience in taxation?

Convenience. Payment of taxes should cause taxpayers as little inconvenience as possible, subject to the limitations of higher-ranking tax principles. Governments often allow the payment of large tax liabilities in installments and set generous time limits for completing returns.

What are the two types of taxes in economics?

There are two types of taxes namely, direct taxes and indirect taxes. The implementation of both the taxes differs. You pay some of them directly, like the cringed income tax, corporate tax, and wealth tax etc while you pay some of the taxes indirectly, like sales tax, service tax, and value added tax etc.

What is convenience principle?

3. Canon of Convenience: ADVERTISEMENTS: According to the third canon of Adam Smith, the sum, time and/manner of payment of a tax should not only be certain but the time and manner of its payment should also be convenient to the contributor.

What is objective of taxation?

The primary purpose of taxation is to raise revenue to meet huge public expenditure. Most governmental activities must be financed by taxation. But it is not the only goal. Truly speaking, in the modern world, taxation is used as an instrument of economic policy. …

What does FICA stand for?

Federal Insurance Contributions Act
Federal Insurance Contributions Act tax/Full name
FICA is a U.S. federal payroll tax. It stands for the Federal Insurance Contributions Act and is deducted from each paycheck. Your nine-digit number helps Social Security accurately record your covered wages or self- employment. As you work and pay FICA taxes, you earn credits for Social Security benefits.

What is CGT?

Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive.

What is canon of convenience?

Canon of Convenience: Taxes should be levied and collected in such a manner that it provides the greatest convenience not only to the taxpayer but also to the government. Thus, it should be painless and trouble-free as far as practicable.

Who will be benefited by the principle of convenience?

The Government will also be benefited by this principle. (3) Canon of Convenience or Ease: According to this canon of taxation, every tax should be levied in such a manner and at such a time that it affords to the maximum of convenience to the tax payer. According to Adam Smith, a good taxation policy must be convenient for the tax payer.

What is tax incidence in economics?

Tax incidence. Tax incidence refers to how the burden of a tax is distributed between firms and consumers (or between employer and employee). The tax incidence depends upon the relative elasticity of demand and supply. The consumer burden of a tax increase reflects the amount by which the market price rises.

What are the most important principles of taxation?

The following are the most important principles of taxation: 1. Neutrality: Prima facie, a tax system should be designed to be neutral, i.e., it should disturb the market forces as little as possible, unless there is a good reason to the contrary. As a general rule, people do not like tax payment.

Do taxes have to be productive or cost effective?

According to a well-known classical economist in the field of public finance, Charles F. Bastable, taxes must be productive or cost-effective. This implies that the revenue yield from any tax must be a sizable one. Further, this canon states that only those taxes should be imposed that do not hamper productive effort of the community.