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 [...]
The following points highlight the four major economic effects of taxation. The effects are: 1. A redistribution of income 2. A raising of prices 3. A reduction of incentive 4. A reduction of enterprise. Effect # 1. A Redistribution of Income: This effect is felt most in developing countries. A proportional tax will not affect the distribution of income, but [...]
Get the answer of: What should be the Objectives of Tax Policy in Developing Countries? Taxation is the compulsory means by which government finances its activities and expenditures. A distinction is often made between direct taxes and indirect taxes. Direct taxes are assessed upon the tax-paying capacities of assesses such as their income or wealth. Indirect taxes are imposed upon [...]