This is time of the year, when every earning individual in India is rushing in to file their Income Tax. It is important for every individual to file and pay the taxes on time. It ensures smooth functioning of the nation. While many people find #taxes to be an unnecessary burden. However, the fact is, that the government needs funds for various public services it provides such as healthcare, education, infrastructure, social welfare programmes etc. Taxes are their actual source of eceonomy which further help in growth of the economy. Hence, Taxpayers are considered to be the backbone of the country and the tax collected from them is what helps the government run the country.
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An individual has to pay taxes directly or indirectly. Direct taxes are directly levied on their aource of uncome while Indirect source of income are levied indirectly through the purchase of goods and services. The government uses the funds collected as #taxes to offer us a stable economy, better infrastructure, and security that help us live good lives. Taxes are the primary source of revenue for governments and can help economic growth in a number of ways:
Funding government expenditures :
Taxes fund government spending on infrastructure, education, healthcare, and other essential services.
Attracting investment : Deductions on certain services, such as insurance or loans, can encourage individuals and organizations to invest in the economy, which can generate capital and increase revenue.
Promoting income equality : Progressive taxation, where the tax rate increases as the taxable amount increases, can help promote income equality.
Discouraging harmful activities : Taxes on harmful products, like tobacco, can reduce consumption and promote public health.
However, taxes can also affect the economy in the long run, depending on their incentive and deficit effects. For example, high marginal tax rates can discourage work, saving, investment, and innovation. Tax cuts can also slow long run economic growth by increasing deficits.
Tax calculation
In my country, we have different tax slab for different section of the society. While it has nil rate of interest for small earner, while it has medium rate of taxes for a moderate earner. At tye same time, a big income earner has a higher Tax slab. These tax slab were decided by the Finance minister in their annual budget. And every individual have to pay the taxes at the end of the financial year.
Many people alwsys doubt on these tax slab and wanted the richer person of tye society to be charged more. People are in opinion that taxing the rich at a higher rate can help end poverty, protect the climate, and solve global challenges. For example,
a 2% "super tax" on India's 167 wealthiest families in 2022-23 could generate 0.5% of the country's national income, which could be used to fund education, healthcare, and poverty alleviation. A survey also found that 74% of Indians support higher taxes on the wealthy.
However, others argue that raising taxes on the rich could have negative consequences. For example, some say that higher taxes on financial income could cause wealthy households to move their savings from stocks to gold and land. Others say that high taxes combined with poor public services could lead wealthy Indians to leave the country. Additionally, some say that India's income tax system could be improved without raising rates, such as by closing loopholes that exempt agricultural income from taxation.
A flat tax rate is next to impossible to adspt as it may have different repecrussion. While it does not generate sufficient funds for the government at the same time the poor may feel explored, for being kept in same parameter as of the rich. There are many opinion that floats for taxes but I belive the government takes the right instance after co sultation from top authority.