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Explain the merits of direct taxes

      

Explain the merits of direct taxes.

  

Answers

Judy
1. Equitable
Direct taxes are based on the canon of equity. Their burden is equitably distributed as they are progressive in nature. As the income of a person increases, the rate of income tax also increases. so all direct taxes fall heavily on the people whose income and wealth increase. The poor are not affected by such taxes.
2. Certain
Direct taxes satisfy the canon of certainty. The taxpayer is certain as to the time and manner of payment, and the amount to be paid in the case of these taxes. Similarly, the government is also
Certain as to the amount of money it shall receive from these taxes.
3. Economical
These taxes also satisfy the canon of economy. The cost of collection of direct taxes is low. In the case of income tax, it is deducted at the source from the salaried persons. The assessments of wealth, incomes ,inheritance gifts etc can be made by same officer .no separate staff is needed for each. Such taxes are also economical to the taxpayers who make payments direct into the treasury.
4. Elastic
Direct taxes are flexible and thus satisfy the canon of elasticity. The government can increase or decrease the rates of direct taxes according to the requirements of the economy. In case of war, natural calamities, or emergency, the state can raise the rates of these taxes in order to have larger tax revenue. During a depression, it can reduce their rates considerably.
5. Simple
Direct taxes are simple and easy to understand
6. Desirable
These taxes do not involve general opposition from the public because they are paid by those persons or firms who come under the jurisdiction of income tax or corporation tax. Thus they are based on the canon of desirability.
7. Reduce Inequalities
These taxes help reduce income and wealth inequalities because of their progressive nature. The rich are taxed heavily through income tax, wealth tax, expenditure tax, excess profit tax, gift tax”etc. so long as they are alive; and through inheritance taxes or death duties when they die. The poor and the income groups which lie below the minimum tax limit are exempted from these taxes.
8. Civic Consciousness
Direct taxes inculcate civic consciousness among the taxpayers. They are conscious that they are paying taxes to the government and take interest in the activities of the state as to whether public expenditure is incurred on public welfare or not. Such civic consciousness puts a check on the wastage of public expenditure in a democratic country.
Judiesiz answered the question on July 7, 2018 at 00:13

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