Ease of administration and compliance

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.

In underdeveloped nations, where issues like illiteracy, a lack of commercial marketplaces, a lack of accounting records, and insufficient administrative resources may make it difficult to administer and ensure compliance, administrative considerations are especially crucial. Under these conditions, achieving crude justice may be better to attempt impossible fine-tuning for the sake of equality.

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Clarity

The tax rules and regulations must be clear to the taxpayer, as straightforward as feasible (given other objectives of tax policy), unequivocal, and certain—for both the taxpayer and the tax administrator. Every country has tax regulations that are far from being widely understood by the general people, even if the principle of certainty is more closely followed now than it was in Adam Smith's time and arbitrary tax administration has decreased.

As a result, there is not only a significant amount of error but also a breach of honesty and respect for the law, as well as a tendency to discriminate against the uninformed and the underprivileged that are unable to take advantage of the various legal tax-saving opportunities that are open to the educated and the wealthy. At times, efforts to attain fairness have exacerbated complexity, undermining the goals of change.

Stability

Tax rules should be modified rarely and when they are, they must be done so as part of a comprehensive and systematic tax reform that includes sufficient provisions for a just and smooth transition. Frequent tax law changes may lead to lower compliance or behavior intended to offset potential future changes in the tax code, such as storing alcohol in anticipation of higher alcoholic beverage tariffs.

Cost-effectiveness

In accordance with other taxation objectives, the expenses of tax assessment, collection, and control should be maintained to a minimum. The resources required for compliance and administration are short in developing nations and in those transitioning from socialism, yet these nations do not place a low priority on this value. It is obvious that cost concerns should not come at the expense of equality and economic logic. The expenses that need to be reduced not only come from the government but also from the taxpayer and private fiscal agents like employers that withhold taxes on behalf of the state.

Convenience

Subject to the restrictions of higher-ranking tax principles, taxpayers should have as little trouble as feasible while paying taxes. Governments frequently grant extensive time restrictions for filing returns and permit the payment of hefty tax obligations in installments.

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