Relationship between Taxation and Economic Development of a Country

Abstract

Taxation is considered as the principal source of government earnings, revenue is considered as the fuel of government machineries. In other word it could be said that, government earns through taxation and spend it to provide multidimensional services like security, social safety, health care, road, bridges, transport, education so on and so forth services. Therefore government usually emphasis on enlarging the tax coverage and tax providers net. Acts were enacted to provide adequate legal power to the tax collectors so that, they can meet up targeted revenue collection. This enormous power sometimes drives tax collectors into illegal exercise of state power to achieve personal benefits. Therefore tax collectors are the richest, powerful and wealthiest segment of the society throughout the history. In modern system of governance, tax system is important because it provides governments with reliable and sustainable means of revenue collection; reduces dependency on foreign aid, increase financial autonomy; enables government to provide various cash support to deserving citizens; encourages good governance, accountability, and transparency; helps formalize the economy and promote economic growth etc. It is government’s rights to collect taxes, but at the same time government must remember that, it is tax payer’s right to know how efficiently government is spending their money for the welfare of the entire nation. It is also a tax payer’s right to pay the tax without hassle or nay sorts of anxiety.

Keywords: Taxation, Tax, Customs Duty, Tariff, Government Revenue, Income Tax, Corporate Tax

JEL Classification: H24, H25