Taxation Case

Published: 2021-06-29 07:10:40
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Category: Social Issues

Type of paper: Essay

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After examination of the various taxes that exist (direct and indirect), and relating them to various countries (Barbados, United Kingdom and India), it cannot be concluded that any particular type of tax is indeed better than the other, in fact there should be a blend of both for a tax system to be effective and a well-balanced one. It is acknowledged that there are quite significant advantages and disadvantages to the both types of taxes, as well as very persuading arguments for the use of one over the other in a tax system.
However, the key determinants of which taxation methods to use in a country's tax system is based on firstly the size of the country's economy. This is a significant factor as if a country's economy is a small one, it may be wiser to have greater emphasis on indirect taxes. This is because a lower direct tax rate will result in greater disposable income, which will result in greater spending in the economy. The government will use this spending to generate revenues through indirect taxation and these revenues generated may be greater than or proportionate to that of the taxes that are generated by direct and other forms of taxes. This was reflected in the revenues of Barbados in 2003 generated by tax. The total tax generated in this year totaled $993.4 million with the indirect taxes accounting for $548.8 million or 55.2%.

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