13. Explain the basic principle of a sound tax system? (FEA)
(1)
Fiscal adequacy -- the sources of
revenue should be sufficient to meet the demands of public expenditure;
revenues should be elastic or capable of expanding or contracting annually in
response to variations in public expenditures
(2)
Equality or theoretical justice --
the tax burden should be distributed in proportion to the taxpayer’s ability to
pay (ability-to-pay-principle); similarly situated taxpayers should pay equal
taxes, while those who have more should pay more
(3)
Administrative feasibility -- tax
laws should be capable of convenient, just and effective administration or
enforcement at a reasonable cost
*even if these
principles are not followed these will not make tax laws invalid; these are
just guidelines
Comments
Post a Comment