Non-revenue Objectives of Taxation

 

12.   What are the non-revenue objectives of taxation?

(1)  Taxation can strengthen anemic enterprises or provide incentive to greater production through grant of tax exemptions or the creation of conditions conducive to their growth

(2)  Taxes on imports may be increased to protect local industries against foreign competition or decreased to encourage foreign trade

(3)  Taxes on imported goods may also be used as a bargaining tool by a country by setting tariff rates first at a relatively high level before trade negotiations are entered into with another country to enhance its bargaining power

(4)  Taxes may be increased in periods of prosperity to curb spending power and halt inflation or lowered in periods of slump to expand business and ward off depression

(5)  Taxes may be levied to reduce inequalities in wealth and incomes

(6)  Taxes may be levied to promote science and invention or to finance educational activities or to improve the efficiency of local police forces in the maintenance of peace and order through grant of subsidy

(7)  Taxation may be made as an implement of the police power to promote the general welfare (regulatory tax power) (sumptuary power)

(8)  Tax provisions may be enacted so that low income individuals pay little or no income taxes through a system of exclusions, exemptions, deductions and tax credits

(9)  Tax provisions may provide incentives for certain desirable activities to encourage investments in productive assets or facilities that will lead to increased employment of particularly low and middle income workers; or are designed to discourage certain socially undesirable activities