Taxation Canon of Equity

Equality here involves equality of sacrifice, and not equality of the amount paid. The poor and the rich both should pay what they can pay and equality and justice demand that no one should pay more than what he is able to pay.

(ii) “The tax which each individual is bound to pay, ought to be certain, and not arbitrary. The time of payment, manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person.”

A tax should not be arbitrary. Everyone must know well in advance what he has to pay, when he has to pay, and where he has to pay. When he knows all this, a tax-payer can adjust his expenditure with the least inconvenience. The government, too, becomes certain, as far as possible, of its receipts.

(iii) “Every tax ought to be levied at the time or in a manner, in which it is most likely to be convenient for the contributor to pay it.”

A tax should be collected at the time when the tax-payer has the means to pay. If public authorities demand payment when it is not convenient for the tax-payer, it becomes burdensome and there is probability that it may not be paid at all.

A convenient tax is justified on the grounds of productivity and good government, and also from the point of the tax-payer, particularly when he belongs to the poor class in the community. The greater the convenience the less waste of time and of resources involved in collection and payment.

(iv) “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.”

The machinery required for collecting taxes should be simple and economical so that the cost of collection and the loss to the individual and the community should be small in proportion to the proceeds.

It is, therefore, necessary that an able Finance Minister should always see that the cost of collection does not exhaust the major...