The Purpose of Taxation

The purpose of taxation is to raise revenues for the functioning and running of the government machineries. Taxation also improves the services the government offers to its people and also increases the quantum of revenue collection.

There are several purposes of taxation such as to accumulate funds for the function of the government machineries, to improve services of the government, improve employment at all industry verticals, induction of modern technology in to the system, rationalization of terms and condition of the economic system and rationalization of employment terms and conditions.

Nature and Scope of the Power of Taxation


1. Legislative- this power can only be exercised by the law making body (Congress) not the executive or the judicial branch of the government, except when delegated by the national legislative body to a local legislative body or to the executive branch, subject to limitations as may be provided by law;
2. Inherent in sovereignty- the power exists as an incident or attribute of sovereignty, as it is essential to the existence of every government. The power can therefore be exercised even without the constitution or any law expressly conferring such power.

Scope of the Power of Taxation

It is comprehensive, unlimited, supreme and plenary, but subject to constitutional and inherent limitations.

Taxation as the power to destroy

The power to tax can be used to destroy or drive out a business by making the tax so high that the business is unprofitable. In the interest of public health, exactly that is now being done to the cigarette industry!
It is the reason that religious activities and news publishing are not taxed, so that neither the states nor the federal government have that power over them. Distinguished taxation , eminent domain , police power

Tags : EconomicsTax
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