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The choice and structure of tax laws are influenced by opinions on what constitutes proper tax policy, although administrative factors may substantially account for historical trends in taxes. Import charges were among the oldest taxes, for instance, as imported goods are simpler to tax than domestic produce.

Although there are significant national variations, the following broad assertions can be used to characterise the growth of taxes in recent years:-

The types of taxes charged by central governments show that there was significant fiscal centralization over the majority of the 20th century. They now have authority over the three taxes that generate more revenue: income and corporate taxes, payroll taxes and value-added taxes.

Adam Smith, a philosopher and economist who lived in the 18th century, made an effort to codify the principles that should guide a fair taxation system.

He established four general canons in Chapter 2 of Book V of The Wealth of Nations. In other words, we can write those canons as:-

Tax policy may be influenced by a number of ideologies, political forces, and objectives. Here is a summary of some of the key ideas that might influence taxes decisions.

80c deduction is beneficial for tax deductions.

Due to the characteristics of a market economy, an effective tax system is necessary. Although there are numerous instances to the contrary, economists often hold that markets do a reasonably effective job of making economic decisions over options like consumption, production, and finance. They believe that tax policy should, in general, refrain from influencing how the market distributes economic resources.

One must keep in mind that taxes must be administered by a responsible authority while addressing the broad principles of taxation. Clarity, stability (or continuity), cost-effectiveness, and convenience are the four fundamental conditions for the proper administration of tax legislation.

Know the benefits of tax exemption.

The assumption of the king's absolute ownership of the land was followed by the right to tax as the next logical step. Manu claims that the monarch was the sole ruler of the country, and as such, he was entitled to a part of the land's bounty. To gift, sell, or purchase land, the king's approval was required. The king simply seemed to have total ownership; the land actually belonged to the people.

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