Taxation Principle

Basic concepts by which a government is meant to be guided in designing and implementing an equitable taxation regime. These include:

1. Adequacy: taxes should be just-enough to generate revenue required for provision of essential public services. 
2. Broad Basting: taxes should be spread over as wide as possible section of the population, or sectors of economy, to minimize the individual tax burden.
3. Compatibility: taxes should be coordinated to ensure tax neutrality and overall objectives of good governance. 
4. Convenience: taxes should be enforced in a manner that facilitates voluntary compliance to the maximum extent possible.
5. Earmarking: tax revenue from a specific source should be dedicated to a specific purpose only when there is a direct cost-and-benefit link between the tax source and the expenditure, such as use of motor fuel tax for road maintenance.
6. Efficiency: tax collection efforts should not cost an inordinately high percentage of tax revenues.
7. Equity: taxes should equally burden all individuals or entities in similar economic circumstances.
8. Neutrality: taxes should not favor any one group or sector over another, and should not be designed to interfere-with or influence individual decisions making.
9. Predictability: collection of taxes should reinforce their inevitability and regularity.
10. Restricted exemptions: tax exemptions must only be for specific purposes (such as to encourage investment) and for a limited period.
11. Simplicity: tax assessment and determination should be easy to understand by an average taxpayer.