Before you ask the question on what are the best RV wash brush your camper life, perhaps you should be concerned as well about the tax that comes with the products and services the government imposes. We all know that taxes are used in fostering economic growth. Governments need it in order to have sustainable funds for their public investments and social programs.
Where Do Your Taxes Go?
Aside from that, tax are used for programs that provide infrastructure, education, health and several other services that play an integral role in achieving common goal of a functional, orderly and prosperous society.
If you think that taxation is focused solely on paying for public services and goods, you are wrong. This is because it plays a key role in social contract between the economy and its citizens too.
The way taxes are spent and raised can serve as a determining factor too in how legitimate the government is. Holding the government accountable for taxes is encouraging for effective administration of the tax revenues and good public financial management.
Every government needs revenue but, the challenge is how to meticulously choose not just to level the rates of taxes but also, the base tax. In addition to that, governments have to carefully design tax compliance system that’s not going to discourage the taxpayers. In a recent survey of 147 economies, it showed that companies are considering tax rates as among the 5 biggest challenges to their operations.
Proper Taxation is Crucial
The amount of tax cost among businesses really matter for growth and investment. Where there are high taxes, it makes businesses to opt out of formal sector. In a study, it showed that having higher taxes are oftentimes linked with less formal businesses as well as lower private investment. A 10% point increase in effective corporate income tax rates is connected with the decrease in investment ratio to the country’s GDP by up to 2% point.
Being able to keep the rate of tax at a reasonable amount is important for it encourages development of private sector as well as the formalization of new investors and thus, businesses.