Benefit principle of taxation with diagram11/17/2023 ![]() If you have any doubt about this article, you can comment us. ![]() Because we are bringing you such helpful articles every day. If you like this article, share it with your friends and turn on the website Bell icon, so don’t miss any articles in the near future. This is also applied when local bodies collect special levies for the. Hope you get the full details about it and hope you like this article. Thus benefit principle is applied to the collection of road tax from vehicle owners. So friends, this was the benefit of taxation? (Benefit of Tax). Therefore in such a situation we can not use benefit principle to distribute the tax. (ii) Government provide different types of services to the community, as a whole, not an individual basis. Thus according to this the poor should bear higher taxes. This is because poor people receive higher benefits from the expenditure programme of a govt. (i) According to critics, the benefit principle does not obey the principle of justice. The benefit theory of taxation or benefit of tax has been criticised on the following ground. Criticism of benefit of taxation or benefit of tax Under the benefit principle, taxes are thought of as a payment for services rendered by the government to individuals. The higher the benefits, the higher is the tax and vice-versa. It means taxation goes in proportion to the benefit enjoyed by the people. The percentage of taxes also increase from OM to OM1. Here AB is the benefit line.įrom the above figure, it is clear to us that when benefit increases from OP to OP1. On OY axis we measure percentage increase in benefit. On OX axis we measure percentage increases in taxes. This principle of taxation has been explained with the help of a following diagram. ![]() We get-Īggregate benefit = Total volume of taxes. Therefore, according to the benefit theory of taxation or benefit of tax. In this way, this theory emphasises that justice in taxation should be done it taxes are imposed in proportion to the benefit enjoyed by the people from the various services of the government. Thus taxation is just like a price for the services provided by the government. This video is a brief explanation of the Benefit theory of taxation. should not impose the taxes greater than the benefits received by the tax payers. The person receiving equal benefits from the government should pay equal amount as taxes and those receiving greater benefits should pay more as taxes than those receiving less benefits. Taxation - History, Revenue, Governments: Although views on what is appropriate in tax policy influence the choice and structure of tax codes, patterns of taxation throughout history can be explained largely by administrative considerations.
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