Professional Documents
Culture Documents
Policy
Annette Nellen
San Jos State University
Presentation Overview
Purpose of the statement
Overview to the 10 principles
Examples of application of the 10
principles
Certainty
Tax rules should specify when the tax is to
be paid, how it is to be paid, and how the
amount to be paid is to be determined.
Certainty, rather than ambiguity.
Ability to determine tax base and rate.
Basically, the level of confidence that exists that
the tax is being calculated correctly.
Convenience of Payment
A tax should be due at a time or in a
manner that is most likely to be
convenient for the taxpayer.
Helps ensure compliance.
Appropriate payment mechanism depends on
amount of liability and ease of collection.
Economy of Collection
The costs to collect a tax should be kept
to a minimum for both
the government and taxpayers.
How many revenue officers are needed?
Closely related to simplicity principle.
Simplicity
The tax law should be simple so that
taxpayers can understand the rules and
comply with them correctly and in a
cost-efficient manner.
Reduces the amount of errors.
Increases respect for the system.
Enables taxpayers to understand tax consequences
of their transactions.
Neutrality
The effect of the tax law on a taxpayers
decisions as to how to carry out a particular
transaction or whether to engage in a
transaction should be kept to a minimum.
Taxpayers should not be unduly encouraged or
discouraged from engaging in certain activities due to
tax law.
Primary purpose of tax system is to raise revenue, not
change behavior.
Appropriate Government
Revenues
The tax system should enable the government
to determine how much tax revenue will
likely be collected and when.
Need to have some level of predictability and reliability
to enable governments to know how much will be
collected and when.
Generally, government realizes better stability with a
mix of taxes.
Challenges
Desire to use the tax law for more
than raising revenue.
Frequent changes to the tax laws.
Not all ten principles can be achieved
to same degree for all proposed
changes - need to strike a balance
though.
Needs work:
Certainty
Convenience of payment
Neutrality
Economy of collection
Simplicity
Minimum tax gap
Transparency
Appropriate government
revenues
Example: Charitable
deduction for nonitemizers
Problem areas:
No problem with:
Convenience of
payment
Transparency
Appropriate
government
revenues
Questions?
Comments?