Role of Tax in Economic Development.

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Date Submitted: 03/28/2011 04:55 AM

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From the definition of tax we know that, Tax is the revenue collected by the government from persons and organizations under different taxing acts. In other words it is a liability imposed upon the assessee who may be the individuals, group of individuals and other legal entities. According to justice holmes, the price paid to the govt for living in a civilized society is the tax. According to Taylor,taxes are compulsory payments to govt without expectation direct benefit to the tax payer. That is it is not a price paid by the tax-payer for any defenite service rendered or a commodity supplied by the govt.

To know about the role of tax in economic development at first we have to know what is economic delelopment.

Economic development is the increase in the standard of living in a nation's population with sustained growth from a simple, low-income economy to a modern, high-income economy. Also, if the local quality of life could be improved, economic development would be enhanced. Its scope includes the process and policies by which a nation improves the economic, political, and social well-being of its people.

Tax policy can affect the pace of economic development and the way the rewards of that development are distributed. taxation plays a prominent role in the economic development of a country. Every objective of tax focus on economic development of a country. Like -

Collection of revenue-to improve the performance of different sectors of the country govt needs revenue. It cannot perform its administrative and development activities without collection of is the main objective of tax. The 70 to 80 pecent of revevue is collected by taxin bangladesh now a tax plays an important role in development of a society.

Redistribution of income- it means the transfer of income from some individuals to others which is caused by progressive tax.the redistridution of income from rich person to poor person reduces inequality. Such transfer increases...