Any economic system that is focused on long term sustainable growth follow the principle that influence free market enterprise would generally encourage a rich individuals to spend as much of his money as possible. Most growing economies follow the typical concept that it is worth for long term growth as a rich individual buys costly goods like an estate and then scope of job increase.
While this is not the only way how the economy grows it does contribute in a considerable manner toward the total growth in the economy. From the people who work in the agency that makes real estate to the people who maintain the real estate, everyone seek a job.For the average individual, it has been difficult to perceive the entire processes associated to taxation.
It has been a problem to be aware about the intricacies associated to taxation and still it continues to be so. So, it is rather unfortunate that people increasingly do not seem to know the government’s taxation policies .
Often people misinterpret the debates related to taxation. Many such people harp on some huge tax breaks that the wealthy and the well-known people enjoy but they refuse to see the logic for such policies.
People also get stuck on the assumption that only the rich get the tax exemptions. Reality differs, government is actually encouraging the wealthy people to spend their money in a specific way to get a tax break. In general, such breaks only involve indirect taxes.
VAT or Value Added Tax has been a major area of dispute related to indirect tax. For example, any item purchased from the border requires the purchaser to pay Value Added Tax and that is when the question crops up about whom to pay the Value Added Tax and who is the taxing entity. Some nations prefer that it should be the point of sale, while others maintain that it should be the nation in which the consumption of the product takes place. As this can lead to a immense confusion regarding who is offering taxes to whom, it may also lead to unfortunate cases of double-taxation or even towards cases where the confusion leads to complete absence of taxation.
Analysts of the government’s tax policies sometime complain that the tax exemptions provided to the rich and the well known people are too deep and there does not remain enough money in the state treasury to be used for public welfare especially for the poor. But it is accepted that even within different sections of government’s machinery there is a lot of wastage of public funds and most of the money hardly reaches to the really poor people.
Accordingly, a number of proposals were tailored to minimize doubts regarding the application of VAT. These help a lot to and allow the business people the peace of mind that would inspire them to invest. Most tax analysts and experts accept that the development in economies would be beneficial. So, in the absence of globally agreed-upon rules and regulations for the Value Added Tax, there can be certain confusion about the implementation of universal taxation policy. The Organization for Economic Co-operation and Development or OECD is attempting to put an end to the prevailing confusion about taxation and international trade.
Last Updated on : 1st August 2013