By cano jualitievii) Canon of simplicity viii) Canon of diversity, ~~ Now we explain all these canons of taxation: i. Canon of Equality: Canon _of equality states that the burden of taxation_must distributed equally or equitably among the taxpayers. How this sort of equality robs of justice because not all taxpayers ha the same ability to pay taxes. Rich people are capab! Ing more taxes than poor people. Thus, justice demands that < having greater ability to pay must pay large taxes. If_ everyone is ed_to_pay taxes according to_hi s of all taxpayers become equal. This non of equality (of sacrifice). To establish equality in axes are to be imposed in accordance with the principle of abil to pay. In view of this, canon of equality and canon of, of the same coin. the two side: The tax which an individual has to pay should be certain and arbitrary. According to A. Smith, the time of payment, the m of payment, the quantity to be paid, i.e., tax liability, ough be clear and plain to the contributor and to everyone : of certainty embraces _a_lot of things. It_ must _be ce! taxpayer as well as to the tax-levving authority. ta. Not only ue that the ge eriod, Any amount of uncertainty in these respects py lot of trouble. invite aUi Canon of E, {conomy: This canon implies that the cost of collecting a tax sh« minimum as possible. Any tax that involves high adminis! costand unusual delay in assessment and high collec tion of should be avoided altogether. According to A. Smith: “Every tax ought to _be ©! as both t Pe ople as yuld_be as trived rand. above what it brings d also to the OV ernment. Thus, it practicable. v s levied at time or the manner be conve after the harv people are taxed at source at the time of re These canons of taxation are observed, of course. faithfully, by modern governments. Hence these are b classic canons of taxation. We now present other canons of taxation: i. Canon of Productivity: According to _a_well-| known clas: pile aa fi he field s that « only thosc oductive effort bea taxes shouIn such a way that the ra —A€cording Xigencies of the Thment needs it_must be ; to_ex t of ine pe oney.it must _be able to extract as ene neome 4S Dossible without enerating any harmful cor through Talsing tax rates. Inco me tax satisfies this canon. St be simple and intelligible to the people so aver is able to ‘calculate it without taking the i 2nsullants. A complex as well as.a combtmeel eet Nts ell as a complicate: vield_undesir: side-effects. It_may encourage _ta le_side-effects. It_m evade taxes f the tax system is found to be complicated. 2 in the sensi most honest educated tax; avers will have to seek advi consultants. Ultimately, such a tax system has the pot breeding corruption in the society. iv. Canon of Diversity: Taxation must be dynamic, ‘This_means_that _a: country’s structure ought dynamic or dive: me _rat having a single or two taxes, Diversification in a tax truct demand involven of. jority of the sectors asked to pay to thé national exchequer leaving a lar er opulation Tea uched. Obviously, incidence of such a tas ES de greatest an certain taxpa vers. A dynamic or {ax structure will result in the allocation of burden of taxes the vast population resulting in a low degree of incid in the aggregate, a single tax system is introduced, only a partic)The_aboy OVE can, d ‘ons ‘ati requirement: ce ot taxation are_considered tobe ©” {aX system is rarely cc tax policy. Unfortunately, suc! 2” Soth £0 on maintain pee cans $0 that a near- ideal tay structure Characteristi Dogg estes of Canons of Taxation: felled atat be a near-ideal) tax system has te fulfil ths i The dep enistics: : : i. The distribution of tax burden should be equitable st every person is made to pay his ‘fair ” This is known as the ‘fairness’ criterion which foct Horizontal _equity— equals should pay equal taxe equity—un-equals should pay unequal taxes. That is to say people should pay more taxes. ii, But equity must_not_hamper_productiv burdens should _be provided _to___correct_ ineft This ‘efficiency’criterion says that it should raise reven the least_costs to the taxpayers so that tax system _can al resources without distortion. iii, The two other criteria are: ‘flexibility’ and ‘transpare! A good tax system demands changes in tax_rates circumstances change the system. Further, a good tax transparent in the sense that taxpave hould know paying for the services they are getting. iv. A good tax system is expected to facili policy to achieve the goals of (a) stability (b) economic growth.