Advantages Of Income Tax In Cigarettes

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INTRODUCTION OF INCOME TAX IN MALDIVES INTRODUCTION An income tax is a direct tax payable by individuals on their earnings and investment income (Kaplan Publishing UK, 2014). Income tax can be progressive, regressive or proportional. It is practiced in most of the developed countries like UK, USA, Canada, Japan and Australia. Every tax payer may be entitled to a basic personal allowance. All individuals (married couples are treated as separate individuals) including children are chargeable to income tax (Kaplan Publishing UK, 2014). ADVANTAGES OF INCOME TAX IN MALDIVES ECONOMIC GROWTH The population of our country has already crossed 4 lacs. Out of these 60.5 percent of people are employed according to the (Statistics, 2014) which means they…show more content…
A higher tax on cigarettes may serve to reduce their consumption habits. However, tax-payers do not react to the increase in tax burdens in the same way. Majority of Maldivians are living in capital city Male’ where 50 % of their income is paid on rent. Some of them work for incentives while others prefer free-time. With the implementation of income tax most people will feel burdensome since there will be an increase in bills to be paid which might lead to stress in work place resulting in less efficiency and in most cases the workers opt for tax evasion. TYPES OF TAX IMPLEMENTATION If the government is imposing progressive income tax it may be a financial hardship, regardless of the amount. Majority of the population living in congested capital city, any deduction in their earning even the smallest may result in a significant decline in the standard of living, unlike income deductions to high grossing households who save the majority of their income. If regressive tax is to be imposed the economy will face a downfall as most of the Maldivians are middle class families who earn an average of RF 10,000-12,000 per month. Rich and high income earning corporations and individuals will benefit. According to Warren Buffet, it seems like those who can afford to pay higher taxes are the ones that don’t have to. Proportional tax is where each individual is entitled to a pay a fixed amount of tax regardless of their…show more content…
Moreover, there have been cases where people have tried to minimize tax within the law. Implementation of income tax might lead to similar consequences. Also, there is a highly likely chance of tax avoidance by politically powerful individuals and corporations. CONCLUSION In my opinion imposing income tax has its own merits and demerits. The government gains a lot of capital from income tax. As stated above a low tax rate can increase savings of an individual and corporations leading to the increase in investments in an economy. Moreover, income generated from tax can be used for the economic growth of the nation and in building a robust economy. However, a progressive taxation system and a low tax rate can only bring social equality and justice with in the economy and lessen the burden on the poor. Moreover, the government need to make sure the economy is aware of the taxation system before imposing it. Thus reducing the penalties and chances of tax avoidance and evasion. REFERENCES Buffet, W. (2007). Kaplan Publishing UK. (2014). Taxation. Kaplan Publishing
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