We have made
reference in earlier units to the division of the economy into various sectors,
one of which is
the public sector.
The principal feature of this part of the economy is that ownership and control
are in the
hands of government
in one form or another.
Therefore the public sector consists of Federal or
Central
government, state
government authorities, and public corporations. However, public expenditure
includes all
expenditure under the
control of the public sector which has to be financed mainly by taxation or
borrowing.
In unit thirteen
(13), public finance is explained as that aspect of economics which deals with
government
revenues and
expenditure. Again it involves detailed analysis of the various sources from
which the government
derives its income.
Taxation is one of the major sources of the revenue to the government. This unit
looks at taxation in
all aspects and effects of taxation in the economy.
Monetary policy is
advocated by the monetarists as the most effective means of controlling
economic
variables.
However, Keynesian
economists argue that monetary policy alone is not sufficiently powerful as a
Stabilization policy.
To them, the most effective way of controlling the economy is the use of fiscal
policy.
They see monetary
policy as playing only a supportive role. The emphasis of our discussion in
this unit is
fiscal policy. We
shall, therefore, give attention to fiscal policy in this unit.
Fiscal policy is the
influence of economic activities through variations in taxation and government
expenditure
or public sector
expenditure.
What is Tax?
Several definitions
of tax appear in the economy literature. These definitions do not really vary
as the same
though/runs through
all of them.
According to Dalton,
tax is a compulsory contribution imposed by a public authority, irrespective of
the
exact amount of
service rendered to the tax payer in return. Elsewhere, tax described as a
compulsory
contribution from a
person to the government to defray the expenses incurred in the common interest
of all,
without reference to
the special benefits conferred. From these definitions, three principal
features of tax can
be deduced as
follows:
(i) It is a
compulsory contribution imposed by government on private persons, groups and
institutions within
the country. Since it
is a compulsory payment, a person who refuses to pay a tax is liable to
punishment.
(ii) A tax is a
payment made by the tax payers which is used by the government for the benefit
of all
citizens. The state
uses the revenue collected from taxes for providing economic, social,
educational,
health and general
administrative services which benefit all people.
(iii) Tax is not
levied in return for any specific or direct services rendered by the government
to the payer.
In summary it can be
said that tax is a compulsory payment of money to government by individuals,
groups
and corporations. It
can be levied on wealth income or as surcharged on prices. Or taxation can
simply be
seen as compulsory
transfer or payment of money from private, individuals, institutions or groups
to the
government.
Taxation Objectives – Reasons why Government Levy Tax
(1) The primary
objective of tax is to raise revenue for the government. Indeed, to the most
economics, tax
constitute the major
source of revenue for the treasury.
(2) To encourage
even development: The tax proposals can be designed to push productive
resources,
especially capital
from relatively more developed areas to relatively less developed areas of the
nation.
(3) To control and regulate
the production of certain goods, taxes may be imposed on the production of
certain commodities
considered harmful or injurious to either consumers or the workers.
(4) To check the
cyclical fluctuations in income and employment: Tax system can be adjusted
to
motivate saving and
investment which through the multiplier can accelerate income and thus increase
employment.
(5) To
redistribute Income: One way of achieving the government’s role of reducing
the irregularity gap
is to operate a
highly progressive income tax system. This will reduce the consumption and
health
accumulation
tendencies of the rich. Taxation is used to reduce the gap between the income
of the rich
and the poor.
(6) To check
Inflation: With reasonable level of economic growth and full employment, an
increase in tax
unaccompanied by
increase in government expenditure will reduce the purchasing power of
consumers
and thus check
demand-full inflation.
(7) To regulate the
consumption of certain commodities. Taxes can be imposed to control the
consumption
of certain
commodities considered either harmful/injurious to consumer or non-essential
and too luxurious.
(8) Taxes may be
imposed to influence the method and kind of business. This may take the form of
encouragement in
which a subsidy will be adopted. The underlying motive may be to protect or
subsidise
the said business and
commerce. This may take the form of agricultural price support tax reduction
or input subsidization
(e. g. fertilizer procurement and distribution in Nigeria).
(9) To prevent
Dumping: There is a tendency for the industrialized world to dump their
cheap products
on the developing
countries where such products may not even be considered as necessaries heavier
tariffs can be
imposed to prevent this act.
(10) To protect Infant
Industries: Protective tariffs are also imposed to prevent the demise of
infant local
industries as a
result of foreign competition. Import duties are specifically designed to serve
this purpose.
Taxation and Fiscal
Policies 105
(11) To control
Monopoly: Certain types of taxes may be anti-monopoly in purpose. Such
taxes include
undistributed profits
tax, excessive profits tax, intercorporate dividends tax and consolidate
returns tax.
(12) To allocate
resources: Taxation is also aimed at allocating resources between, for
example, private
and public goods and
between investment and consumption goods. It may also be aimed at correcting
deficiencies in the
pricing mechanism resulting, for example, from monopoly elements, the existence
of
external economics or
diseconomics and in case where the social costs sharply diverge from private
costs.
(13) To maintain
balance in the nation’s foreign accounts: Certain taxes may be imposed to
reduce imports
and encourage exports
such that balance of payments deficits are avoided, i. e. in Export Promotion.
Principles of Taxation
Also called the
cannons tax, the principles were enunciated by Adam Smith. These principles
have largely
been accepted by
subsequent writers who have also elongated the list. Some of the principles
include:
1. The Cannon of
Equity: This means that the tax payable by a tax payer should be based on
the tax
payer’s ability to
pay. This principle demands economic justice in which each person’s
contribution to
the state should be
as much as possible be proportionate to the person’s ability. In order words
the rich
should pay or
contribute more than the poor.
2. Cannon of
Certainty: This principle holds that a tax payer should be made to know the
exact amount
of tax he should pay
and when. This is to avoid the tax payer being cheated by corrupt tax
officials.
3. Cannon
Convenience: This means that the amount of tax and the timing of tax
payment should be
made to suit the tax
payer. It should be related to the way he receives and spends his income.
4. Cannon of
Economy: Proponents of this principle posit that the costs of assessment,
administration
and collection of tax
should as much as possible be small relative to the volume of revenue generated
in
practice. The cannon
requires that the tax structure should be such that it is economically correct.
5. The Principle
of Flexibility: Proponents of this principle posit that the tax system
should make room
for changes in the
tax structure to meet the changing requirements of the economy and treasury. It
should not be too
rigid.
6. Principle of
Diversity: The sources of Tax revenue should be as diverse as possible to
ensure the
certainty of some
revenue to the treasury at all times. It is, however, noted that too much
multiplicity of
taxes may negate the
principles of economy.
7. The Principle
of Buoyancy: The system should be such that tax revenue would have inherent
tendency
to change with
changes in the National Income level without any changes in the tax coverage
and rates.
8. Principle of
Neutrality: The willingness of tax payers to work, invest or save must not
be discouraged
by the tax system.
9. The Principle
of Productivity of Fiscal Adequacy: It requires the tax system to yield so
much
revenue that the
government would not need to borrow or be forced to resort to deficit
financing. It
should not be too
high as to discourage productivity.
10. The Principle
of Simplicity: This cannon holds that the tax system and laws should be
clear and
simple enough for the
tax payer to understand. The tax schedule should be simple and easy to
calculate
by both the tax
collector and the tax payer. If the tax system is complicated and difficult to
administer
and understand, it
breeds problems of differences in interpretation and legal tussles.
11. Cannon of
Impartiality: This cannon advocates that no partiality should be shown in
the distribution of
tax burden.
12. Cannon of
Acceptability: This principle holds that the rate of taxation should be
such that is politically
acceptable.
Types of Taxes – Nigerian Tax Structure
Two major groups of
taxes can be identified. They are direct and indirect taxes.
Direct Taxes are
levied on incomes and profits of firms. On the other hand, indirect taxes are
levied on
goods and services.
They can easily be avoided by not buying the goods to which they are attached
to.
Direct Taxes
1 . Income Tax: This is the type of
tax paid according to one’s income. Companies like human beings are
legal beings.
Corporations, therefore, pay taxes on their income. Personal taxes are paid on
total wages,
salaries, profits,
interest and rent which a person receives with due allowances for family size,
home
ownership, insurance
contribution and other factors. Company or Corporate Income Tax is paid only on
corporate profit.
2 . Poll tax is
imposed at a flat rate per head of population: It is a regressive
tax because no matter
the size of a
person’s income, everyone has to pay the same amount. Nigeria has a poll tax
for people
with low incomes.
3 . Capital Tax: These are taxes
imposed on property and other capital assets. For instance, when a
person dies his
assets are subject to capital tax, in this case the term death duty or estate
duty is used.
4 . Capital Gains
Tax: This
is paid on property, when you buy a property and over time it rises in value,
the amount by which
it rises over what you paid is capital gain. The tax paid on this gain is
called capital
gains tax.
5. Petroleum
Profit Tax: In Nigeria, a tax is charged, assessed and payable upon the
profits of each
accounting period of
any company engaged in petroleum operations during any such accounting period,
usually one year.
Indirect Taxes
These are taxes
levied upon persons or groups whom they are not intended to bear the burden or
incidence,
but who will shift
them to other people. They are normally levied on commodities or services hence
their
services does not
fall directly on the final payers. Ability to pay here is assessed indirectly.
Examples of Indirect
are:
Custom Duties – Import and Export
duties
Import duties are
levied on goods coming into the country from abroad.
Export Duties: These are taxes
levied on goods which are exported or sold to other countries by the home
country.
Excise Duties: These are levied on
certain goods produced or manufactured locally.
Value – added – Tax
(VAT) –
This belongs to the family of sales taxes. The valued – added tax is not a tax
on the total value of
the goods being sold but only on the value added (the difference between the
value of
factor services and
materials that the firm purchases as inputs and the value of its output) the
value that a
firm adds by the
virtue of its own activities to it by the last seller. Thus, the seller is
liable to pay a tax on its
gross value but net
value, that is the gross value minus the value of the services and materials
purchased from
other firms, etc.
Sales Tax – These are taxes on
selected sales transactions but applied at only one stage of business activity.
Stamp Duties: These are taxes on
documentary evidence of particular transactions such as transfer or
property loans,
bonds, mortgages, debentures, bills of exchange, promissory units, cheques
bills of lading,
letters of credit,
policies of insurance, transfer of shares, proxies and receipts.
It is evidence and
not the transactions itself that are taxed.
Inheritance Tax – This is tax payable
by the recipient or beneficiary of a deceased property.
Effects of Tax
The question posed
now is whether tax has other effects and the answer is yes. The imposition and
payment
of taxes elicit some
responses from the imposition of tax engenders distortions in the production,
employment,
consumption, wealth
distribution and other variables in the economy. These distortions which are
collectively
called the effects of
tax could be for good or for bad. We shall take a global look at these effects.
For this
purpose, four groups
of effects shall be considered. These are:-
1. Effects on
Inflation
2. Effects on Wealth
and Income distribution
3. Effects on
Economic Stability
4. Effects on
productive growth
Effects on Inflation
Inflationary
pressures will be heightened if taxes are increased on commodities with high
demand elasticity
and low supply
elasticity. On the other hand, the pressure on prices may not be increased if
there is an
increased tax on
commodities with high supply and low demand elasticities.
Effects of Wealth and
Income Distribution
Government assume the
responsibility for reducing the inequality gap (in income and wealth) in the
economy.
Under certain
circumstances, taxation can be a potent tools for achieving this noble
objective.
Market economics are
characterised by great deal of income inequalities through the institutions of
private
property and
inheritance. Taxation has the egalitarian objective of reducing this income and
wealth inequalities
which incidentally conflicts
with increasing production and economic growth objectives.
Effect on Economic
Stability
While some economist
have faith in the inbuilt Stabilizers that automatically adjust the economy if
there is any
variation in one
variable, others like Keynes opine that the economy is incapable of stabilising
itself. Hence
government must
intervene by way of tax and or expenditure adjustments. Progressive taxation is
thus used
as an instrument to
neutralise the fluctuations in output, employment, income, prices, etc.
Effect on Production
and Growth
Tax can affect the
production and growth of the economy in several ways. Indeed tax can influence
the
supply of resources
for production. High taxes, for instance, can reduce disposable income which
will in turn
reduce savings and
investment. If investors are taxed on their retained profits, they will resort
to borrowing
since retained
earnings will no longer be a sure way of getting finance. Even when resources
are available,
their allocation to
different areas of production can be influenced by tax. It is, therefore,
necessary to be
careful and judicious
in the choice of taxes as well as items and industries to be taxed. Taxes
influence the
location of
industries as well as the supply of labor, suppliers of labor must move to tax
heavens from
areas of high tax.
Fiscal Policy works
through and regulates the market mechanism without taking over the
responsibility of
the market mechanism
itself.
The Goals of Fiscal Policy
Fiscal policy, as an
effective instrument of policy, may be used to accomplish the following goals:
(a) To increase
employment opportunities or to attain full employment: The goal of fiscal
policy is
the reduction of
unemployment rate. Fiscal policy aims at achieving full employment in the
economy
and at the same time
ensure reasonable price stability. It is the wish of every government to reduce
the
rate of unemployment
to the lowest minimum.
High rate of
unemployment requires expansionary fiscal policy but the government must also
guard
against the inflationary
impact of expansionary fiscal policy.
(b) Price Stability: Control of inflation
fiscal policy aims at Stabilization of prices in the economy, that is
counteracting or
avoiding inflation and deflation. Expansionary fiscal policy is used to fight
deflation
while a contraction
fiscal policy is used to fight inflation taking into cognizance the aims of
attaining full
employment.
(c) To promote
economic growth and development: One of the primary goals of fiscal policy is the
achievement of steady
growth in national resources and in national output as well as structural and
attitudinal changes
in the economy.
Economic growth here
means continuing increase on the annual basis in production of goods and
services or a rise in
per capital income made possible by continuing increasing in per capital
productivity
whereas economics
development refers to the changes in economic growth and social structure that
always accompany
economic growth.
(d) To achieve equity
in income redistribution: Fiscal policy is used to redistribute income so as to
achieve equity and
for the attainment of social and economic justice. In equities in income,
distribution
is very high in the
developing countries of the world. Progressive tax structure is one of the
measures
taken by the
government to arrest the issue of inequality in income distribution.
(e) To achieve a
satisfactory or favorable balance of payments: Fiscal policy is used
to avoid and or
correct balance of
payments deficits in the nation’s external trade relations. In such a
situation, efforts
should be geared
towards the reduction of importation by increasing import duties. Import
substitution
industries should be
established and exports should be given a big boost.
(f) To achieve a
stable exchange rate: To avoid fluctuations in the nations external reserves and to
avoid fundamental
disequilibrium in the nation’s balance of payments position, effective fiscal
policy
measure are adopted.
Stability in the price has great influence on the value of a country’s currency
which will equally
affect the exchange rate between that currency and other currencies of the
world.
(g) To increase the
rate of investment, low rate of investment is not good for any economy. Low
rate of
investment will lead
to low rate of employment and eventually low income. Fiscal policy is employed
to
generate revenues
which should be used to increase investment in major sectors of the economy to
avoid recession. With
government spending in the form of investment, the multiplier effect will help
to
put back the economy
on the right track.
The process will help
to accelerate economic growth (National income via the multiplier process)
Types of Fiscal Policy
There are basically
two types or approaches to fiscal policy. These are compensary and counter
cyclical
approaches and they
deserve good treatment.
(1.) Compensatory
Fiscal Policy: This refers to the management of government finance to compensate
for fluctuations in
National income and employment. The compensatory fiscal policy which combines
deficit and surplus
financing attempt to achieve high level of National Income. It uses taxation
and
spending to produce
the desired balance.
The point here is
that the government budget should be used as the major instruments for
achievement
of macro-economic
objective and the budgetary changes should be made as often as desired and
in whatever magnitude
desired. To maintain a desired level of income during a business decline, any
decrease in private
spending or investment must be balanced by government policy of either
increasing
government spending
or raising total government purchases from private business or reducing taxes
i.
e. increasing the
income of consumers, business or both has to be noted that the reverse will be
the case
during the
inflationary period. To maintain a desired level of income during a period of
over expansion
and inflation,
government policy would comprise a reduction in the government spending, a
possible
increase in tax or
both steps.
(2.) Counter Cyclical
Action: The counter cyclical fiscal policy is the government effort to
combat the
cyclical instability
of the private enterprise system. Such action take many counter cyclical forms,
including fiscal
policy, monetary policy and transfer payments. The basic aim of all such
actions is to
eliminate the effects
of the periodic fluctuations of the economy and to Stabilize national income
and
production.
Under this
countercyclical approach, the government plays the role of varying its
expenditure policies
with the objective of
moderating, fluctuations in income and employment over the business cycle,
there,
the government is
required to unbalance its budgets during deflationary and inflationary periods.
This
means that the
government will increase its expenditure and cut taxes when private spending declines.
The Instruments of Fiscal Policy
There are a number of
instruments which the government employs in order to achieve its fiscal policy.
Such
instrument include:
(1.) Government
Expenditure: This is the total amount spent by the various three tiers of
government
within a given period
through governmental ministries, and departments including transfer payments.
According to Anyafo
(1996:230), Transfer payments in the Nigerian content include “debt service
i.e.
internal payment and
capital repayments on internal and external debts, pensions and gratuities,
external
financial obligations
such as animal subscriptions to international bodies, and others”.
There are two types
of government expenditure: Capital expenditure and Recurrent expenditure.
Capital expenditure
are those expenditure made on items that can retain their value for more than
one
year. Example of
capital expenditure includes costs of constructing new roads and buildings,
acquisition
of plant and
machinery, and other fixed assets.
Recurrent expenditure
are expenditure made on revenue items that will set up its value within one
year. Such
expenditure is called recurrent expenditure because they are made repeatedly on
a yearly
basis. They include
salaries and other personnel costs, telephone services, stationeries and other
running
costs of the various
ministries and department of the government.
As a tool of fiscal
policy, government expenditure can be used to influence the economy by
influencing
aggregate demand.
The increase in
government expenditure will make money available in the hands of the public.
This
will increase
aggregate demand which will make business of invest more and to employ more
hands.
Moreover, the new
government projects will create employment opportunities. Thus, the decline in
the
economic activity
will be reversed in government, expenditure may lead to an increase in the rate
of
inflation.
During inflation,
government can reduce the level of government spending and pursue a surplus
budget. The surplus
fund is used in servicing public debts. The reduction in government expenditure
will
reduce the spendable
money in the hands of the public. This will lead to a reduction in aggregate
demand and general
price level. Thus, the rate of inflation will be reduced, the negative aspect
of a
reduction is the
level of unemployment and level of economic growth.
(2.) Taxation: The second
instruments of fiscal policy is taxation. Government can increase or reduce the
amount of tax payable
by individuals and organization s as a means of influencing the macro-economy.
An increase in
taxation reduces the spendable money in the hands of the public and hence the
aggregate
demands. Such
increase in taxation can, therefore, be used to reduce the rate of inflation in
the
economy.
A reduction in
taxation does the opposite. It leaves more money in the hands of the public
since only
a small percentage of
their income is paid back to the government. A reduction in taxation can be
used
by the government to
stimulate aggregate demand, investment spending and employment when there is
a slow down in the
economy.
Unit that there is an
inter-relationship between the two tools of fiscal policy. A reduction in
taxation
can be used to
achieve a deficit budget even when the level of government expenditure remains
unchanged.
In that same manner,
an increase in taxation can also be used to achieve a budget surplus.
(3.) Subsidy: This is another
instrument of fiscal policy. While high rate of taxation will reduce economic
activities of the
firm and the purchasing power of individuals, subsidy to the business firm will
help to
boost economic
activities. Subsidy will help the business firms to produce at a very low cost
and make
the product of the
firms affordable by the customers. Subsidy is only useful, during depression
and low
economic activities
while taxation will be very useful during boom and high economic activities.
(4.) Budget Surplus
and Budget Deficit: Tools/Instruments of fiscal policy are basically budgetary policy.
The Federal budget is
a statement of planned revenue and expenditure of the government within a
fiscal period. It
shows how the government intends to get money and how she intends to spend the
money got.
A budget is said to
be a balanced budget when the planned expenditure of the government equals
expected budget. When
government expenditure is more than government revenue the budget is said to
be a deficit budget.
A simple budget or budget surplus, occurs when planned revenue is more than
planned expenditure.
Surplus budget and
deficit budget are unbalanced budget. An unbalanced budget can be achieved in
any of two ways.
First is by increasing or reducing government expenditure. Second by increasing
or
reducing taxations.
That is the reason why the tools of fiscal policy are said to be government
expenditure
and taxation. State
in another ways, the tools of fiscal policy are surplus and deficit budget.
Either
way the tools are the
same and they have been discussed as government expenditure and taxation.
Limitations of Fiscal Policy
(a) There is the
problem of how to make accurate short-run forecasts of the economic situation.
Therefore,
fiscal policy action
should be geared not to forecasts, but to actual situations since early
solution to
the problem is
unlikely. So long as a forecast is inaccurate, governmental action based upon
it might be
harmful rather than
remedial.
(b) There is the
problem of how to appraise the effective force of the numerous techniques of
fiscal policy.
The more tractable
nature of this problem calls for the exploration of the issues by academic
economists
to add to our
knowledge of the force of specific measures of fiscal policy. This calls for
speeding
up by governmental
research in the CBN, the Ministry of Budget and planning, the Ministry of
Finance
and Economic
Development, etc.
(c) There are
political obstacles in the way of a success fiscal policy, arising because the
economy is
shaped to allow full
expression of dissent which may be anti-thetical to execute parliamentary
decisions
about debatable
issues.
(d) There is also the
problem of accurate data, which may become available only with a delay.
(e) The
uncontrollable protions of the budget pose a problem in the use of fiscal
policy.
(f) The use of fiscal
policy is also limited by the time long involved.
(g) It is also
discriminatory in effect since it is non-neutral not affecting the whole
economy equally.
There are, however, a
number of situation in which measures such as variations in government spending
and taxes may not
have the desired effects on the level of economic activities.
Suppose the
government in an attempt to stimulate growth, increases its expenditure. The
resulting spending
on goods and services
may be earned as income but people do not spend this income, it will constitute
a
leakage out of the
circular flow of income. The multiplier effect will therefore, be greatly
reduced, and the
resulting effect on
the level of output, income and employment may not be realized.
Again, people who
earn the resulting income as a result of the government increased spending may
not
spend these incomes
on locally produced goods and services. They may decide to spend the incomes on
impacts of the
particular economic exhibits, a high propensity to import as is the case with
Nigeria. The
multiplier may be
generated abroad and not in the domestic economy. Thus, the level of income,
output and
employment may not
change much as a result of the increased government spending.
Furthermore, it is
argued that there are time lags between the time when fiscal policy is required
and the
time it is actually
implemented. This in turn may result in a situation in which by the time a
particular fiscal
policy becomes
operational, the result may be contrary to what was required originally. This
particular criticism
applies as well to
other economic policy measures, monetary policy and incomes policy.
From the foregoing
above, there are broad limitations to the effectiveness of fiscal policy. These
are (i)
Operational
Limitations and (ii) Fundamental Limitations. The operational limitations to
the effectiveness
of fiscal policy are
usually associated with its timing and magnitude of the policy options, in
terms of time,
there exist lags in
the system. There is also the implementation or action lag. This is the length
of time
between the
realisation of the need for action and the implementation of new policy.
Before this time,
however, the problem of determining the size of (or magnitude of the policy)
government
spending and/or tax
needed had to be contended with.
Fiscal policy is usually
ineffective when the problem in the economy is fundamental, such fundamental
problems calls for
basic adjustments in the economy. Examples include adjustment of production
pattern to
changes in the
pattern of demand and adjustment of wages to the productivity in various lines
of economic
activity.
Conclusion
The problem of paying
for government services is very much apart of the theory of public finance.
There are
ways of meeting the
cost of government services, most of them require a degree of compulsion. This
is
taxation. Taxes are
compulsory contribution from individuals and for business organization s for
the purpose
of financing
government expenditure.
Modern experts in
public finance have argued that there are principles of taxation that sufficiently
meet all
the purposes of
modern economic policy which are partly achieved through budget.
There are two forms
of taxes. These are (a) direct taxes and (b) indirect taxes.
Direct taxes, in very
broad terms, are those taxes levied directly on individuals and business firms.
Indirect
taxes on the other
hand are taxes levied on goods and services.
Fiscal policy is
concerned with deliberate actions which the government of a country take in the
area of
spending money and/or
levying taxes with the objectives of influencing macro-economic variables such
as
the level of national
income or output, the employment level aggregate demand level, the general
level of
prices, etc., in a
desired direction.
Generally, fiscal
policy measures usually attempt to achieve one or some of the following
objectives:
- influence the rate
of the growth of the economy.
- raise the level of
national income, output and employment.
- protect local
industries from unfair competition from abroad.
- moderate
inflationary pressure.
- improve the balance
of payment.
The two key
instruments of fiscal policy are:
- Government
expenditure and
- Taxation
Summary
In this unit, we have
succeeded in establishing that a modern economy, taxation is normally by far
the most
important way of
providing resources to the government, but other methods do exist. This unit
dealt mainly
with the principles
of taxation, different types of tax but also other ways of allocating resources
from private
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