canons of taxation by 19E2179 Ayush D Chabria https://padlet.com/19e2179/fddsssssss en-us 2021-08-31 05:43:26 UTC 2025-10-23 07:54:01 UTC hello@padlet.com A tax has no connection with the benefit received by the payer. Also, the charge is compulsory. Hence in distributing the burden of taxation, a person’s share cannot be decided with reference to the benefit derived by him. 19e2179 https://padlet.com/19e2179/fddsssssss/wish/1706385810 2021-08-31 05:47:33 UTC https://padlet.com/19e2179/fddsssssss/wish/1706385810 (1) Canon of Equality: “The subjects of every State,” Smith asserted, “ought to contribute towards the support of the Government as nearly as possible in proportion to their respective abilities, that is, in proportion to the revenue which they respectively enjoy under the protection of the State. In the observance or neglect of this maxim consists what is called the equality or inequality of taxation.” Equality here does not mean that all tax-payers should pay an equal amount. Equality here means equality or justice. It means that the broadest shoulders must bear the heaviest burden. 19e2179 https://padlet.com/19e2179/fddsssssss/wish/1706386444 2021-08-31 05:47:52 UTC https://padlet.com/19e2179/fddsssssss/wish/1706386444 (2) Canon of Certainty: Adam Smith further said, “The tax which each individual has to pay ought to be certain and not arbitrary. The time of payment, the amount to be paid ought all to be clear and plain to the contributor and to every other person.” The individual should know exactly what, when and how he is to pay a tax otherwise it will cause unnecessary suffering. Similarly, the State should also know how much it will receive from a tax. 19e2179 https://padlet.com/19e2179/fddsssssss/wish/1706388357 2021-08-31 05:48:55 UTC https://padlet.com/19e2179/fddsssssss/wish/1706388357 (3) Canon of Convenience: Smith wrote, “Every tax ought to be levied at the time or in the manner which it is most likely to be convenient to pay it.” Obviously, there is no sense in fixing a time and method of payment which are not suitable. Land revenue in India is realised after the harvest has been collected. This is the time when cultivators can conveniently pay. 19e2179 https://padlet.com/19e2179/fddsssssss/wish/1706388735 2021-08-31 05:49:07 UTC https://padlet.com/19e2179/fddsssssss/wish/1706388735 (4) Canon of Economy: Lastly, Adam Smith held that “every tax ought to be so contrived as both to take out and keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the State.” This means that the cost of collection should be as small as possible. If the bulk of the tax is spent on its collection, it will take much out of the people’s pockets but bring very little into the State’s pocket. It is not a wise tax. 19e2179 https://padlet.com/19e2179/fddsssssss/wish/1706389412 2021-08-31 05:49:30 UTC https://padlet.com/19e2179/fddsssssss/wish/1706389412 (5) Canon of Productivity: This canon emphasizes that a tax should bring in a substantial amount of money to the State. After all, the main object of the taxing authority is to secure funds. Therefore, a tax which does not yield a fair income is not of much use. It is much better to have a few taxes which yield good revenue instead of many taxes yielding a little. 19e2179 https://padlet.com/19e2179/fddsssssss/wish/1706390014 2021-08-31 05:49:51 UTC https://padlet.com/19e2179/fddsssssss/wish/1706390014 (6) Canon of Variety: It is also necessary that the tax system off a country should be diversified. Reliance on just a few taxes is risky. The revenue will not be sufficient, nor will it be fair, because it will not touch a large number of people. In order to be just, a tax system must be broad-based. In order to be adequate, it must be diversified, having a wide coverage over commodities and persons. 19e2179 https://padlet.com/19e2179/fddsssssss/wish/1706392373 2021-08-31 05:51:10 UTC https://padlet.com/19e2179/fddsssssss/wish/1706392373 (7). Canon of Flexibility: ‘Flexibility’ in taxes is different from ‘elasticity’ mentioned earlier as a canon. Flexibility connotes the absence of rigidity in the tax system. A flexible tax quickly adjusts to the new conditions; on the other hand, elasticity means that income can be increased. Presence of flexibility is a pre-condition for elasticity. Lack of flexibility in a tax can cause financial troubles to a State. 19e2179 https://padlet.com/19e2179/fddsssssss/wish/1706393529 2021-08-31 05:51:48 UTC https://padlet.com/19e2179/fddsssssss/wish/1706393529