I had to pay advance tax a few days ago, and the feeling that some of my money was being unfairly taken away hit me again, as I am sure it hits you too.
Ostensibly, governments need to collect taxes to be able to provide public goods like law and order and water supply and garbage disposal. Also, ensuring a certain degree of social fairness is the job of the government, to try and provide equal opportunities to citizens from different socio economic strata and from underdeveloped geographical areas.
I have been thinking about how we could come up with a system of taxation that will not seem unfair to the tax payers. I have been wondering if the entire system of taxation was based on taxing consumption rather than taxing income, we would find it more palatable.
I think it is time I read 'Fair Tax' by Neal Boortz to find out more.
1 comment:
The problem with taxing consumption (like Service tax or VAT) is that it isn't progressive. The rich and the poor pay the same percentage, which is probably unfair.
What's more, take this 'tax on consumption' that is paid and divide it by the original income, and it'll most definitely turn out that the poor man who ends up spending almost all of his income is paying a greater tax percentage that the rich guy who saves up most of his income.
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