3: Purpose of Taxation

Revenue-Raising

Primary purpose of taxation is to provide funds or property with which to promote the general welfare and protection it its citizens.

Non-revenue/Special or Regulatory

Taxation is often employed as a device for regulation by means of which certain effects or conditions envisioned by governments may be achieved

bargaining tool

On imported goods, as ____

Halt inflation

____ in periods of prosperity to curb spending power

ward off depression

in periods of slump to expand business

Fiscal Adequacy

The sources of tax revenue should coincide with, and approximate the needs of, government expenditures.

Administrative Feasibility

Tax laws should be capable of convenient, just and effective administration.

Theoretical Justice or Equality

The tax burden should be in proportion to the taxpayer's ability to pay. This is the so-called ability to pay principle.