The principles and functions of taxation reflect its social purpose. It acts as a tool for the cost redistribution of income. At the same time, at a practical level, the principles and functions of taxation form a totality of funds, using which the authorities maintain a balance between budget revenues and costs. All these properties are the subject of research by many financiers. Let us further consider what tasks taxation performs . Functions, types of taxes will also be described in the article .
general characteristics
Taxation is a seizure of wealth that is based on power subordination. It can be expressed in various forms. In some cases, taxation is accompanied by the use of force. However, as a rule, the withdrawal is the result of consensus between subordinates and authorities in exchange for some preferences received by the former from the latter. If we talk about the state structure, then taxation acts as the basis for financing its activities. It is carried out at the expense of entities that recognize power and accept its protection.
Retribution and volunteerism
In essence, taxation is part of the relationship between power and subordinate entities. However, it is incorrect to talk about his gratuitousness and coercion. The latter acts as a compulsion to fulfill a certain duty. Coercion depends on the nature of the relationship. However, in any case, the fulfillment of the obligation is not free. For example, a vassal pays tribute to his patron. This is partly a forced action. However, it is always paid. In return for tribute, the patron is obliged not to violate or even protect the interests of the vassal. Moreover, the latter often chooses the power subject quite consciously, that is, voluntarily agrees to pay. If we talk about the modern state structure, taxation acts as a set of similar relationships. In them, the subject, paying the prescribed amount, ensures the fulfillment of obligations undertaken by the authorities. In other words, taxation is the subject of a specific agreement between the state and the population. Subordination is of secondary importance. This is due to the fact that the subject can independently choose the power and give him the appropriate authority.
Fiscal tax function
Fiscus in Latin literally means “basket”. In ancient Rome, the fiscal name was the box office. It kept money for extradition. At the end of the 1st century. BC e. this term was used to refer to the private treasury of the emperor. It was run by officials and replenished with revenues from the provinces. In the 4th century n e. the fiscal began to be called a single national center of the empire. Different types of receipts flowed here, funds were distributed here. The main function of taxation is to mobilize and shape the finances of power structures. It provides the accumulation of funds in the budget for the implementation of various programs. All other functions of the tax system can be called derivatives of it.
Social challenge
This function of state taxation is to redistribute public revenues between different categories of entities. Through the implementation of this task, the maintenance of social balance is ensured. Due to the distribution function of taxation , the ratio between the incomes of individual groups of the population changes in order to smooth out inequality between them. This opinion is supported by various experts, including, for example, Professor Khodov.
Implementation
The fulfillment of the social function of taxation is ensured through the transfer of funds in favor of unprotected, weaker citizens. This is achieved by placing a burden on strong categories of people. As noted by the Swedish financier Eklund, most of the production and services are carried out on funds received from taxes, and is distributed almost always free of charge among the population. This, in particular, applies to education, medicine, parenting and some other areas. The goal in this case is to ensure a more or less uniform distribution of assets. Accordingly, funds are withdrawn from some entities and transferred to others. An example of the implementation of this taxation function is excise taxes. They are installed on some types of goods, luxury goods. In a number of socially oriented states (for example, Switzerland, Norway, Sweden), it is almost officially recognized that taxes appear as a payment for highly profitable entities less solvent for stability in a public position.
Regulatory challenge
John Keynes spoke about this function of taxation in due time . He believed that mandatory payments established by the authorities exist solely to regulate relations in the national economy. In this regard, the economic function of taxation is manifested. Moreover, it can be stimulating, reproductive or destimulating. Let's consider them separately.
Stimulation
It is aimed at supporting certain economic processes. Stimulation is carried out through benefits and concessions. At present, the functions of taxes and principles of taxation are manifested in such a way as to ensure appropriate working conditions for enterprises with disabilities, organizations that invest in production, charitable activities, agriculture, etc. Special benefits are established for these and some other associations, " holidays "and other benefits.
Discouragement
It, on the contrary, is aimed at creating obstacles to the development of certain processes. For example, the state applies protectionist measures and imposes high import duties. Obstacles can also be created for internal actors. For example, casino owners have a higher income tax rate.
Contradictions
As Gorsky notes, regulatory and fiscal functions are opposed to each other. However, they themselves are very controversial. For example, the fiscal element has a stabilizing value when it entails a reduction in the tax burden. This can only be done by redistributing the burden between payers. This, in turn, requires consideration of regulatory exemption tools. However, the tax is not aimed at destroying its foundation. It exists to obtain assets and cannot destroy the source of their income. The tax is not intended to be forfeiture, prohibition, restriction or punishment. In particular, the introduction of import duties is stipulated by protectionist policies, and high rates for gambling are connected with the solvency of entities, rather than the desire to eliminate this area of activity.
Regulation Features
According to some experts, the role of tax mechanisms in the field of economic management is somewhat exaggerated. Some authors believe that the mandatory budgetary deductions established by the authorities are practically the only regulator of all financial and economic processes in the country. But the development of various economic spheres is subject to its own laws. At the same time, a rather modest role is assigned to deductions to the budget there. In that sense, one can completely agree with Pepelyaev, who believes that in modern conditions the tax is set for income to the treasury. Accordingly, the impact that is on the payer to obtain a particular result cannot be its main goal. If some deductions perform only a regulatory function, without a fiscal component, then, strictly speaking, they cease to be taxes.
Practical difficulties
The stimulating function of taxation, according to some experts, affects economic behavior indirectly, indirectly, through individual motivational aspects. The established obligation to pay a certain amount to the budget does not activate the desire to earn. Tax is only part of the profit. If the business is initially inefficient, then no relief will help him. For example, domestic agriculture has always been provided with a variety of benefits for almost all payments. However, this did not contribute to the progress and prosperity of the agricultural sector. The incentive to invest in isolation from other economic factors will not bring results. This is due to the fact that investing is determined not by tax benefits, but by the needs of production, the needs for expanding the business. In this regard, Potapov’s statement that the tax stimulus is a secondary mechanism can be considered fair.
Negative consequences
The regulatory function of taxation acts directly and immediately with a discouraging approach. There is no doubt about the veracity of the assertion that everything on which the burden is imposed decreases. High tax rates always entail a recession due to loss of efficiency. In particular, the overwhelming burden in the 30s of the last century led to the liquidation of the peasantry in just a few years. More recently, after the introduction of a 70 percent deduction rate on profits from activities related to video displays, video salons disappeared. The discouraging of imports through the establishment of high import duties also leads to a sharp reduction in the flow of goods.
The control
Using taxation, the state provides supervision of financial and economic operations carried out by citizens and enterprises, monitors the sources of income and expenses of entities. A monetary assessment of mandatory contributions to the budget allows a quantitative comparison of profit indicators with the country's resource requirements. Due to the control function of taxes (taxation), the government receives information on the movement of cash flows. When analyzing the data, the need to adjust budget policy is determined.
Tax principles
They were first formulated by A. Smith. He derived 4 key principles of taxation :
- Equality and justice. This principle assumes that all citizens are ordered to participate in the formation of the country's financial assets in accordance with their income and capabilities.
- Certainty. The tax payable must be clearly established. The population should be clear at what time should be deducted, in what amount, in what way.
- Thrift. Each specific payment should be as effective as possible. Saving is expressed in the minimum cost of power to collect taxes and ensure the activities of control bodies.
- Convenience. Taxes should be levied in such ways and at such a time so as not to disrupt the usual activities of payers. This rule involves the simplification of the deduction process, the elimination of formalities.
Adam Smith not only formulated, but also scientifically substantiated these provisions. He laid the foundation for the theoretical development of the fundamentals of taxation.