Why is the burden of a tax to taxpayers

Many countries are still struggling to collect sufficient revenues to finance their own development. This level of taxation is an important tipping point to make a state viable and put it on a path to growth.

Making it easier to pay taxes improves competitiveness. Overly complicated tax systems are associated with high levels of tax evasion, large informal sectors, more corruption, and less investment. Modern tax systems should seek to optimize tax collections while minimizing the burden on taxpayers to comply with tax laws. There is a need to ensure that the tax system is fair and equitable.

Governments need to balance goals such as increased revenue mobilization, sustainable growth, and reduced compliance costs with ensuring that the tax system is fair and equitable. Fairness considerations include the relative taxation of the poor and the rich; corporate and individual taxpayers; cities and rural areas; formal and informal sectors, labor and investment income; and the older and the younger generations.

The World Bank is the largest provider of development finance for collecting public revenue. In addition to financial support, the Bank also provides governments with guidance and support in the following areas:.

Depending on the nature of tax burdens in a given country, the World Bank Group can help governments improve competitiveness :. The World Bank Group works with governments to create fair and equitable tax systems by reducing the adverse impact of the tax system on the poor, which may include helping to:.

Innovations in Tax Compliance is a World Bank Group program that aims to advance tax reform and compliance in developing countries. The Global Tax Program supports the strengthening of tax systems in developing countries. The Prosperity Collaborative is a multi-stakeholder initiative dedicated to helping countries create better tax systems through innovative technology. This site uses cookies to optimize functionality and give you the best possible experience.

If you continue to navigate this website beyond this page, cookies will be placed on your browser. Cheating on our taxes comes to seem acceptable at least understandable , even though tax evasion is precisely analogous to shoplifting. If we take fire protection, guarantees on educational loans, clean air and water but fail to pay for them, we are stealing. Our language shapes our attitudes. To weigh appropriate tax and expenditure policies in difficult when our language encourages us to think of our taxes as burdens not connected to the benefits we derive from them.

Some weeks ago, I received a brochure encouraging me to open an IRA. By implication, I can continue to enjoy the benefits of government expenditures without paying for them. But that debate is distorted if we enter it with the view that any government expenditure—which means my tax dollar—is inherently burdensome. Is it any wonder that our leaders vie to reduce the burden and the pain, even if in so doing our society becomes somewhat less organized and less civilized?

Keywords: Other, general social insurance. Respectfully, this article Respectfully, this article reads like a slave who's happy with his masters and urges his fellow slaves not to use language that might rock the boat. Tax money is forcibly extracted — stolen — from you and I. It matters not if this money is given to the poor, the sick, the needy or government-created corporate monopolies, special interests or wars etc.

Your article and the quotes from the fabled statists read like double-think designed to keep the unwashed masses from revolting and being happy with their "Leaders".

Suddenly, I'm expected to be silent and accept my payments to the Mafia as necessary and essential and critical if I am to be part of a "civilised society" that is, at its heart, based upon and funded by force and violence.

Overly complicated tax systems are associated with high tax evasion. High tax compliance costs are associated with larger informal sectors, more corruption and less investment. Economies with simple, well-designed tax systems are able to boost businesses activity and, ultimately, investment and employment.

Tax administration is changing as the ecosystem in which it operates becomes broader and deeper, mostly owing to the vast increase in digital information flows. Tax administrations are responding to these challenges through the introduction of new technology and analytical tools.

They must rethink how they operate, offering the prospect of lower costs, increased compliance and incentives for compliant taxpayers.

In , Tajikistan launched the Tax Administration Reform Project and, as a result, the country built a more efficient, transparent and service-oriented tax system. The modernization of IT infrastructure and the introduction of a unified tax management system increased efficiency and reduced physical interactions between tax officials and taxpayers. Following the improvement of taxpayer services, the number of active firms and individual taxpayers filing taxes has doubled and revenue collections have risen strongly.

A taxpayer in Tajikistan spent 28 days in complying with all tax-related regulations, compared with 37 days in A low cost of tax compliance and efficient procedures can make a significant difference for firms. In Hong Kong SAR, China, and Saudi Arabia for example, the standard case study firm would have to make only three payments a year, the lowest number of payments globally.

In Qatar, it would have to make four payments, still among the lowest in the world. In Liechtenstein and Estonia, complying with profit tax, value added tax VAT and labor taxes and contributions takes only 49 and 50 hours a year respectively, around 6 working days. Research finds that it takes a Doing Business case study company longer on average to comply with VAT than to comply with corporate income tax.

However, the time it takes a company to comply with VAT requirements varies widely. Research shows that this is explained by variations in administrative practices and in how VAT is implemented.

Compliance tends to take less time in economies where the same tax authority administers VAT and corporate income tax. The use of online filing and payment also greatly reduces compliance time. Frequency and length of VAT returns also matter; requirements to submit invoices or other documentation with the returns add to compliance time. Streamlining the compliance process and reducing the time needed to comply with the requirements is important for VAT systems to work efficiently.

Filing the tax return with the tax authority does not imply agreement on the final tax liability. Often, the ordeal of taxation starts after the tax return has been filed. Postfiling processes — such as claiming a VAT refund or complying with a tax audit — can be the most challenging interaction that a business has with a tax authority. Businesses might have to invest more time and effort into the processes occurring after filing of tax returns than into the regular tax compliance procedures.

The absence of an efficient VAT refund system for businesses with an excess input VAT in a given tax period will undermine this goal.

VAT could have a distortionary effect on market prices and competition and consequently constrain economic growth. Refund processes can be a major weakness of VAT systems. This view is supported by a study examining VAT administration refund mechanisms in 36 economies worldwide.

The study found that statutory time limits for making refunds are crucial but often not applied in practice. Delays and inefficiencies in the VAT refund systems are often the result of fears that the system might be abused and prone to fraud. That is also one of the reasons why, in some economies, it is not uncommon for a claim for a VAT refund to automatically trigger a costly audit, undermining the overall effectiveness of the system. The Doing Business case study company, TaxpayerCo.

It performs a general industrial and commercial activity and it is in its second year of operation. The case study scenario has been expanded to include a capital purchase of a machine in the month of June. The results show that, in practice, only of the economies covered by Doing Business allow for VAT cash refund in this scenario.

This number excludes the 25 economies that do not levy VAT and five economies where the purchase of a machine is exempted from VAT. In other economies businesses are only allowed to claim a cash refund after carrying forward the excess credit for a specified period of time four example, four months.

The net VAT balance is refunded to the business only after this period ends. This is the case in 27 economies of the measured by Doing Business. The legislation in other economies — typically those with a weaker administrative or financial capacity to handle cash refunds — may not permit refunds outright.