1. Unpopular. Direct taxes pinch the taxpayers because they have to pay them directly out of their incomes or salaries. They are, therefore, unpopular.
2. Inconvenient. These taxes are inconvenient in nature because traders, businessmen, producers, etc. have to comply with a number of formalities relating to their sources of income and expenditure incurred in earning that income. Often the details are incomplete and the various Sections of the Acts so complicated that the taxpayers have to take the help of income tax experts by making them payments. Moreover, these taxes are payable in advance and in lump sum, except in the case of salaried persons. Hence they are inconvenient.
3. Arbitrary. Direct taxes possess an element of arbitrariness in them. They leave much to the discretion of the taxation authorities in fixing the rates of taxation and in interpreting them.
4. Evasion. Since direct taxes pinch every taxpayer, he tries to evade them by filling wrong returns and even takes the help of income tax experts: Thus such taxes cultivate dishonesty and there is loss of revenue to the state.
5. Not Imposed on All. Direct taxes are not imposed on all income groups. Low income groups do not come under the purview of these taxes. Such groups, therefore, do not contribute anything to the state exchequer through direct taxation.
6. Discourage Saving and Investment. Direct taxes adversely affect saving and investment. When people know that with the increase in their incomes and wealth, they will have to pay a large portion in the-form of taxes, they are reluctant to save and invest more. This adversely affects the will to work, save and invest.
7. Discourage Production. Corporation taxes discourage those industries and firms which produce essential goods.
Judiesiz answered the question on July 7, 2018 at 00:15
- Explain the merits of direct taxes(Solved)
Explain the merits of direct taxes.
Date posted: July 7, 2018. Answers (1)
- Explain the demerits of progressive taxation.(Solved)
Explain the demerits of progressive taxation.
Date posted: July 7, 2018. Answers (1)
- What are the characteristics of proportional tax?(Solved)
What are the characteristics of proportional tax?
Date posted: July 7, 2018. Answers (1)
- Discuss in details the types of taxes(Solved)
Discuss in details the types of taxes
Date posted: July 7, 2018. Answers (1)
- Discuss the roles of public finance to the developing countries.(Solved)
Discuss the roles of public finance to the developing countries.
Date posted: July 6, 2018. Answers (1)
- Show the similarities and differences between public and private finance.(Solved)
Show the similarities and differences between public and private finance.
Date posted: July 6, 2018. Answers (1)
- Outline similarities between Debt finance and Ordinary Share Capital(Solved)
Outline similarities between Debt finance and Ordinary Share Capital.
Date posted: May 9, 2018. Answers (1)
- State characteristics of Debt Finance (Solved)
State characteristics of Debt Finance
Date posted: May 9, 2018. Answers (1)
- List the characteristics of an equity investment.(Solved)
List the characteristics of an equity investment.
Date posted: May 9, 2018. Answers (1)
- Distinguish between euro notes and eurobonds(Solved)
Distinguish between euro notes and eurobonds
Date posted: May 4, 2018. Answers (1)
- An investor has bought shares worth £5,000 and wants to estimate how much they will
be worth in a year’s time. Give both a deterministic and...(Solved)
An investor has bought shares worth £5,000 and wants to estimate how much they will
be worth in a year’s time. Give both a deterministic and stochastic model based on an
expected growth rate of 7%.
Date posted: April 23, 2018. Answers (1)
- Highlight ethical standards which should be observed by tax administrators.(Solved)
Highlight ethical standards which should be observed by tax administrators.
Date posted: April 21, 2018. Answers (1)
- State the formula for finding profit of operations in a firm (Solved)
State the formula for finding profit of operations in a firm.
Date posted: April 13, 2018. Answers (1)
- Illustrate how to calculate current Assets turnover(Solved)
Illustrate how to calculate current Assets turnover
Date posted: April 13, 2018. Answers (1)
- Explain the effects of mergers and acquisition(Solved)
Explain the effects of mergers and acquisition.
Date posted: April 6, 2018. Answers (1)
- Explain why the weighted average cost of capital of a firm that uses relatively more debt capital is generally lower than that of a firm...(Solved)
Explain why the weighted average cost of capital of a firm that uses relatively more debt capital is generally lower than that of a firm that uses relatively less debt capital.
Date posted: March 12, 2018. Answers (1)
- Explain the effects of taxation on the ability to work and save.(Solved)
Explain the effects of taxation on the ability to work and save.
Date posted: February 23, 2018. Answers (1)
- Mark and Spenser Company deals with clothing and are planning venturing into Kenyan market. The management team has appointed you as their business consultant. Using...(Solved)
Case Analysis
Date posted: February 8, 2018. Answers (1)
- Strategic management benefits consist of financial benefits and non-financial benefits. Discuss any 5 non-financial benefits(Solved)
Strategic management benefits consist of financial benefits and non-financial benefits. Discuss any 5 non-financial benefits.
Date posted: February 8, 2018. Answers (1)
- Using the Altmans Z-score model assess the financial health of the company (Solved)
The following data relates to a company in the telecommunications industry for the year to 31 December 2011:
Item Sh. 000
Sales 30 000
Total assets 25 678
Retained earnings 177
Total liabilities 15 600
Working capital 1 777
Earnings before interest and tax 2 605
Market value of equity 10 098
Book value of long-term debt 5 044
Date posted: February 8, 2018. Answers (1)