Essential of a good tax system
A good tax system should he composed of taxes which conform to the main canons of taxation. The system as a whole should be equitable. Its burden should fall on the- broadest shoulders. It should also be economical, so that the work of collection is done as cheaply as possible. It should not hamper the development of trade and Industry It should; on the other hand, assist the economic development of the country. The government should be certain of its revenue. The tax system should be based a comprehensive and up-to-date statistical information so that accurate forecasting is made possible. The tax system should not be a mere leap in the dark. Its effects should be calculable with a reasonable precision. The taxes, as a whole, should be convenient, i.e-, felt as little as possible.
The tax system should be uncomplicated, economically satisfactory and elastic so that it can respond to the new needs of the State. It should not be rigid like our land revenue which is fixed for 30 or 40 years.
The ideal of simplicity may lead us to advocate a single tax. But the single lax will expose the tax system to other serious objections. It is, therefore, agreed that a tax structure must be as wide ranged as achievable. There should be variety in the structure. But we do not want too great a multiplicity.
Further, the tax system should be competent from the executive viewpoint. It must be easy to manage. There must be little range for dodging or accretion of amount outstanding.
Another significant feature of an excellent tax structure is that it must be a pleasant. It must be really a system and not a simple gathering of remote taxes. Every tax must fit in correctly in the organization entirely so that it is a division of an associated structure. Each tax must inhabit a specific and due position in the monetary constitution. For example, along with an estate duty or death duty, there should be a gift tax, otherwise the rich may avoid death duty by gifting their wealth to sons and daughters. Nor should the taxes pull in different directions. For example, imposition of a protective duty and a countervailing excise duty do not go well together.