Tax policy plays two important roles in financing economic development. One is to maintain an economy at a higher employment level so that the saving capacity of the people is raised with an increase in income per head. The second is to raise the marginal propensity to save of the community as far above the average propensity to the maximum [...]
In this article we will discuss about the role of the government in a market economy. The classical economists like Adam Smith, J.S. Say and other advocated the doctrine of laissez faire which means non- intervention of the government in economic matters. Adam Smith introduced the concept of the invisible hand, which refers to the free functioning of the price [...]
1. Canon of Ability: The State is necessary for all - rich and poor. Without the State, nobody's life or property is safe. So, everyone is required to pay taxes to meet the expenses of the State. But a person who earns Rs.10, 000 a year does not have the same taxable capacity as the person who earns Rs.100, 000 [...]