Taxation Interview Question:

What do the taxation principles include?

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These include:
Adequacy:
Taxes should be just enough to generate revenue required for provision of essential public services.
Broad Basing:
Taxes should be spread over as wide as possible section of the population or sectors of economy, to minimize the individual tax burden.
Compatibility:
Taxes should be coordinated to ensure tax neutrality and overall objectives of good governance.
Convenience:
Taxes should be enforced in a manner that facilitates voluntary compliance to the maximum extent possible.
Earmarking:
Tax revenue from a specific source should be dedicated to a specific purpose only when there is a direct cost and benefit link between the tax source and the expenditure, such as use of motor fuel tax for road maintenance.
Efficiency:
Tax collection efforts should not cost an inordinately high percentage of tax revenues.
Equity:
Taxes should equally burden all individuals or entities in similar economic circumstances.
Neutrality:
Taxes should not favor any one group or sector over another and should not be designed to interfere-with or influence individual decisions making.
Predictability:
Collection of taxes should reinforce their inevitability and regularity.
Restricted exemptions:
Tax exemptions must only be for specific purposes (such as to encourage investment) and for a limited period.
Simplicity:
Tax assessment and determination should be easy to understand by an average taxpayer.
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