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Basic Principles of a Sound Tax System

By Patchiko95 Feb 27, 2014 300 Words


This principle states that the sources of revenue of the government should be sufficient to meet the demand of the public expenditures regardless of business condition, export taxes, trade balances, and problems of economic adjustment. Taxes should be just-enough to generate revenue required for provision of essential public services.


This principle holds that taxes should relate with the people’s income or their ability/capacity to pay. States that the tax burden must be proportionate to the taxpayer’s ability to pay.


Tax laws should be capable of convenient, just and effective administration. Each tax should be clear and plain to the taxpayer, capable of uniform enforcement by government officials, convenient as to the time, place, and manner of payment, and not unduly burdensome upon or discouraging to business activity

this principle connotes that in a successful tax system, such tax should be clear and plain to taxpayers, capable of enforcement by an adequate and well-trained staff of public office, convenient as to the time and manner payment, and not unduly burdensome upon a discouraging to business activity. 

 The tax system should be capable of being properly and efficiently administered by the government and enforced with the least inconvenience to the taxpayer.

means that tax laws should be capable of convenient, just and effective administration.

 means that tax laws, rules and regulations must be capable of being administered and complied with. Citizenry must easily understand its application for its compliance. No matter how willing and able a taxpayer in complying the mandates of a tax law if he could not comprehend, he could not fully comply the same without lapses. Notably, each error in compliance is penalized and good faith is not always a good defense. 

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