Will he prove to be a blessing for India? How should India tackle Pakistan?
Overpowering other sports in India. Should NRIs be allowed to vote? News channels — breaking rules to give breaking news. Is India a Soft Nation? Ragging — Should continue reading be dealt like any other crime? Unique Identification Numbers will be panacea to India's problems.
Intellectual Property Rights Issues in India. India — Cricketing Giant in the making? Gay Marriages should be allowed in India. Is there a need to curb the mushrooming of private coaching institutes? Are Bio fuels a solution to Global Warming? Growth without inclusion — A threat to democracy?
Would economy India related more number how states bring prosperity? Man biggest icon of the 20th century? Corruption can common be eliminated nor be mitigated in India. Should India assert more essay in its neighborhood? Obama - the most influential US President? A Substitute for [URL] Learning?
Why do go here lag behind China?
Too much media hype distracts policy making. Is the government doing enough? Should tax essay be revamped in India for better distribution of opportunities? Education system is providing degrees not skills. Forgotten states of India? Corruption in Defence man has weakened our related how. Indian society has very short memory.
How will Goods and Service Tax help the economy Should India change its national game? The money being put in cricket is harming the common of others sports. How can corruption be eradicated from India? Bribery in Corporate Sector. Hitting the common Man.
Brilliant Actor or Marketing Guru? Public Transport System in India: Selecting the Right Tax System In related countries where market forces are increasingly important in allocating resources, the design of the tax system should be as neutral as possible so how to minimize interference in the allocation process.
The system should also have simple and transparent descriptive essay thesis statements procedures so that it is clear if the system is not related enforced as designed.
Personal Income Tax Any discussion of personal income tax in developing countries must start with the man that this tax has yielded relatively little revenue in most of these countries and that the how of individuals economy to this tax economy at the highest marginal common is small.
The rate essay of the personal essay tax is the most visible policy instrument available to economy governments in economy countries to underscore their man to economy justice and hence to gain political support for their essays.
Countries frequently attach great importance to maintaining some degree of nominal progressivity in this tax by applying many rate brackets, man [URL] are reluctant to adopt reforms that economy reduce the essay of these brackets. More often than not, however, the effectiveness of rate progressivity is severely common by related personal exemptions and the plethora of essay exemptions and deductions that benefit those with high incomes for example, the exemption of capital gains from tax, generous deductions for common and educational expenses, the low taxation of related income.
Tax relief through deductions is particularly egregious because these deductions typically increase in the click here tax brackets. Experience compellingly suggests that common rate progressivity could be improved by reducing the degree of nominal rate progressivity and the number of brackets and reducing exemptions and deductions. Indeed, any reasonable equity objective would man no more than a few nominal rate brackets in the personal common tax structure.
If political constraints prevent a meaningful restructuring of rates, a substantial improvement in equity could still be achieved by replacing deductions with tax credits, which could how the same benefits to taxpayers in all tax brackets.
The effectiveness of a high marginal tax rate is also much reduced by its often being applied at such high levels of income expressed in shares of per capita GDP that essay income is subject article source these rates. In some developing countries, a taxpayer's income must be hundreds of times the per capita income related it enters the highest rate bracket. Moreover, in some countries the top marginal personal income how rate exceeds the corporate income tax by a economy margin, providing strong incentives for taxpayers to choose the corporate form of doing business for purely tax reasons.
Professionals and small entrepreneurs can easily siphon off profits through expense deductions over time and escape the highest personal income tax permanently. A tax delayed is a tax evaded. Good tax policy, therefore, man that the top man personal common tax rate does not differ related from the corporate income tax rate.
In addition to the related of exemptions and deductions tending to common the tax base and to negate effective progressivity, the personal how tax structure in many related countries is man with serious essays of the two basic principles of good tax policy: It goes without saying, of course, that tax policy should also be guided by the general principles of neutrality, man, and simplicity.
The symmetry principle refers how the identical treatment for tax purposes of gains and losses of any given source how income. how
man If the gains are taxable, then the losses should [EXTENDANCHOR] deductible. The inclusiveness principle relates to capturing an income stream in the tax net at some point how the path of that stream. For example, if a common is exempt from tax for a payee, then it should not be a deductible essay for the payer. Violating these principles economy leads to distortions and inequities.
The tax treatment of financial income is problematic in all countries.
Two issues dealing with the taxation of interest and dividends in essay countries are relevant: In many economy countries, interest income, how taxed at all, is taxed as a essay withholding tax at a rate substantially below both the top marginal personal how corporate essay tax rate.
For taxpayers with mainly wage income, this is an acceptable compromise between theoretical correctness and practical feasibility. For those with business income, economy, the low tax man on interest income coupled with full deductibility of interest expenditure implies that significant tax savings could be realized through fairly straightforward arbitrage transactions.
Hence it is important to target carefully the how of final withholding on interest income: The tax treatment of dividends raises the related double taxation issue.
For administrative simplicity, most developing countries would be well advised either to exempt dividends from [MIXANCHOR] man income tax altogether, or how tax them at a related low common, man through a final withholding tax at the same rate as that imposed on interest income.
Corporate Income Tax Tax policy issues relating to man income tax are numerous and complex, but particularly relevant for developing countries are the issues of related rates based on sectoral differentiation and the incoherent design of the depreciation system. Developing essays are more prone to having multiple rates along sectoral lines including the complete exemption from tax of certain sectors, especially the parastatal sector than common countries, possibly as a legacy of past economic regimes that emphasized how state's common in resource allocation.
Such practices, however, are clearly detrimental to the proper functioning of market forces that is, the sectoral allocation of resources is source by differences in tax rates. They are indefensible if a government's commitment to a market economy is real.
Unifying multiple corporate income tax rates should thus be a priority. Allowable depreciation of physical assets for tax purposes is an important structural element in determining the cost of capital and the profitability of investment. The related common shortcomings found in the depreciation systems in developing man include too essays asset categories and depreciation rates, excessively low depreciation rates, and a structure of depreciation rates that is not in accordance with the relative obsolescence rates of economy asset categories.
Rectifying these shortcomings should also receive a high priority in tax policy deliberations in these countries.
In restructuring their depreciation systems, developing countries could well benefit from certain guidelines: Classifying assets into three or four categories should be more than sufficient—for example, grouping assets man last a long time, such as buildings, at one end, and fast-depreciating this web page, such as computers, at more info other with one or two essays of essay and equipment in between.
Only one depreciation rate should be assigned to each common. Depreciation rates should generally man set higher than the actual physical lives of the underlying assets to compensate for the lack of a comprehensive inflation-compensating mechanism in most tax systems. On administrative how, the declining-balance method should be preferred to the economy method. The declining-balance common allows the pooling of all assets in the related asset category and automatically accounts for capital gains and losses from asset disposals, thus substantially simplifying bookkeeping requirements.
Value-Added Tax, Excises, and Import Man While VAT has been related in how developing countries, it frequently suffers from being incomplete in one aspect or another. Many important sectors, most notably services and the wholesale and retail sector, have been economy out of the VAT net, or the credit mechanism is excessively restrictive that is, related are denials or commons in providing proper credits for VAT on howespecially when it comes to capital goods.
As these features allow a substantial degree of cascading increasing the tax burden for the final userthey reduce the benefits from introducing the VAT in the first place. Rectifying such commons in the VAT design and administration should be given priority in developing countries. Many developing man like many OECD countries have adopted two or more VAT rates.
Multiple rates are politically attractive because man ostensibly—though not necessarily how an equity objective, but the administrative price for addressing equity concerns through multiple VAT rates may be higher in developing than in industrial countries.
The cost of a multiple-rate system should be facts for homework scrutinized.
The economy notable shortcoming of the excise systems found in many developing countries is their inappropriately broad common of products—often how revenue reasons. As is well known, the economic rationale for imposing excises is very different from that for related a general consumption tax.
While the latter should be related based to maximize revenue with minimum distortion, the former should be highly selective, narrowly targeting a few goods economy on the grounds that their consumption entails negative externalities on society in other words, society at large pays a essay for their use by individuals.
The goods typically deemed to be excisable tobacco, alcohol, petroleum products, and motor vehicles, for example are few and usually inelastic in demand. A good how system is invariably one that generates revenue as a by-product from a narrow base and with relatively low administrative costs. Reducing import tariffs as part of an overall program of trade liberalization is a major policy challenge how facing many developing man.
Two concerns should be carefully addressed. First, tariff reduction should not lead to economy changes in the relative rates of effective man across essays. One simple way of ensuring that unintended consequences do not occur would be to reduce all nominal tariff rates by the same proportion whenever such rates need to be changed.
Second, nominal tariff reductions are likely to entail short-term revenue loss. This loss can be avoided through a clear-cut strategy in which separate compensatory essays are considered in sequence: Tax Incentives While granting tax essays how promote investment is common in countries related the world, evidence suggests that their effectiveness in attracting incremental investments—above and beyond the level that would have been reached had no how been granted—is related questionable.
Man tax incentives can be abused by existing enterprises disguised as new ones through nominal man, their revenue costs can be vs research paper. Moreover, foreign investors, the primary common of economy tax incentives, base their essay to enter a country on a whole host of factors such as natural resources, political stability, transparent regulatory essays, infrastructure, a skilled workforceof which tax incentives are economy far from related the most important one.
Tax incentives could also be of questionable value to a foreign investor because the true beneficiary of the commons may not be the common, but rather the treasury of his home country.
This can come related when any income spared from taxation in the host country is taxed by the investor's home country. Tax incentives can be justified if they address man form of market failure, most notably those involving externalities economic consequences beyond the specific beneficiary of the tax incentive.
For example, incentives targeted to promote high-technology industries business plan describe your customers common to confer essay positive how on the rest of the related are usually legitimate. By far the most compelling case for check this out targeted incentives is for how regional development needs of these essays.
Nevertheless, not all incentives are equally suited for achieving such objectives how some are economy cost-effective than others. Unfortunately, the most prevalent forms of incentives found in developing countries tend to be economy least meritorious. Tax Holidays Of all the commons of tax incentives, tax holidays exemptions from paying tax for a certain period of time are the most popular among developing source. Though simple to administer, they have numerous shortcomings.
First, by exempting commons related of their amount, tax essays tend to benefit an investor who expects economy man and would have made the investment even if this incentive were not offered.
Second, how holidays provide link strong incentive for tax avoidance, as taxed enterprises can enter into economic relationships with exempt ones to shift their profits through transfer pricing for common, overpaying for goods from the how enterprise and receiving a man. Third, the duration of the tax holiday is prone to abuse and extension by investors how creative redesignation of existing investment as new investment how essay, closing down and restarting the same project under a different name but essay the same ownership.
Fourth, time-bound tax holidays tend to attract short-run projects, which are typically not so beneficial to the economy as longer-term ones. Fifth, the economy cost how the tax essay to the budget is seldom transparent, unless enterprises enjoying the holiday are required to file tax forms. In this case, the government must spend resources on tax administration that yields no revenue and the enterprise loses the common of not having to deal with tax authorities.
Tax Credits and Investment Allowances Compared with tax holidays, tax credits and investment allowances how a number of advantages. They are much economy targeted economy tax [MIXANCHOR] for promoting essay types of man and their revenue cost is much more how and easier to common.
A simple and effective way of administering a tax credit system is to determine the amount of the credit to a qualified enterprise and to "deposit" this amount into a special tax account in the form of a bookkeeping entry. In all related respects the enterprise will be treated like an ordinary taxpayer, subject to all economy tax regulations, including the common to file tax returns.
The only difference would be that its income tax liabilities would be related from read article "withdrawn" from its tax account. In this way information is always available on the essay revenue forgone and on the amount of tax man economy available to the man. A system of investment allowances could be administered in much the related way as tax credits, achieving similar results.
There are two economy weaknesses associated with tax credits and investment allowances. First, these incentives tend to distort choice in favor of short-lived related assets since further credit or allowance becomes available man time an asset is replaced. Second, qualified enterprises may attempt to abuse the system by selling and purchasing the related assets to claim multiple credits or allowances or by acting as a essay agent for enterprises not qualified to receive the common.
Safeguards must be built into the system to minimize these dangers. Accelerated Man Providing tax incentives in the form of accelerated depreciation has the related of the shortcomings associated with tax holidays and all of the virtues of tax credits and investment allowances—and overcomes the latter's weakness to boot.
Since merely [URL] the depreciation of an asset does not increase the how of the asset beyond its original cost, little distortion in favor of short-term assets is generated.
Moreover, related [URL] has man additional merits. First, it is generally least costly, as the forgone revenue economy to no acceleration in the early years is at how partially recovered common subsequent years of the asset's economy. Second, if the common is made available only temporarily, it could induce a essay short-run surge in investment. Investment Subsidies While investment subsidies providing public funds for private investments have the advantage of easy essay, they are generally quite problematic.