What is the general purpose of taxation in our society?
Rules by which an authority (usually a government) imposes a financial obligation on individuals or organizations within its domain. Property or transactions can be taxed. While taxes are primarily intended to fund the operation of a government, many tax laws are created to encourage or discourage certain behaviors by citizens or companies.
Expert Solution
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Tax is an enforced fee that is charged on individuals and organizations by government or its agency on a product, income, or service. Despite many people complaining of making tax contributions to government, these contributions are very important for the economy of a country. This is because these financial contributions are used by government for the implementation of various socio-economic development projects such as the construction of roads and bridges, schools, health facilities and provision of social services like national security, provision of salaries for civil servants including the police, the army, judges, doctors, nurses and teachers. However, to clearly understand the rationale behind government charging of taxes terms such as taxation, equity in relation to taxation, direct and indirect tax and sources of income, need to be clearly understood.
Taxation mainly refers to the actual act in which government or its taxing authority. It actually collects tax from individuals and organizations. In Malawi, taxation is guided by several principles that are mostly highlighted in the Taxation Act and Amendments. The taxation principles emphasize that taxes collected should be just-enough to generate revenue required for provision of essential public services, and that taxes must be spread over as wide as possible section of the population, or sectors of economy. Furthermore, taxes are enforced in a manner that facilitates voluntary compliance from individuals and organizations to the maximum extent possible, but also taxes must equally burden all individuals or entities in similar economic circumstances. Adding to this, taxes do not favor any one group or sector over another.
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