Question

Why should taxes to be passed to the government?

Answer 1

There ate two kind of taxes - direct and indirect taxes.

Indirect taxes are consumption based taxes which are levied on consumption of goods and services. A person has no choice, but to pay it to the service provider or seller of goods/products, as the case may be.

Now, since one has no choice to pay indirect taxes, i presume that you are asking about Income tax.

Why should I pay Income tax?

Generally, a person, other than a corporate entity is liable to pay income tax in the country where he resides, however, a corporate entity (a company) is liable to pay income tax in the country where its Place of Effective Management is situated. Reason being that to earn income, you have used the resources of the country where you have had your residence, and therefore you shall be liable to pay income tax in that particular country.

Now coming to the question asked by you,Why should we pay income tax?

Income tax is payable to the Govt. of the Country and is collected by the Revenue Authority.

Govt. requires funds to discharge its numerous responsibilities for the development of the country, betterment of society as a whole and other non-developmental but essential obligations. To discharge its duties, Govt. incurs various kinds of expenditure including Expenditure on:-

Administrative Services (Police Forces, External Affairs, etc.)

Defence Services (including development of border roads)

Cooperation with Other Countries

Interest on funds borrowed from International organizations

Border services, Social and Community Services (Education, Medical, Housing, Social security, Information services, Public Sanitation, Water supply, etc.)

General Economic Services (Foreign trade and Export promotion, development of backward areas)

Agricultural Development(Crop & animal husbandry, Food storage & warehousing and other rural development, Irrigations support to farmers, Flood control, etc.)

Setting up and maintenance of Power projects.

Transport & Communications (Railways, Shipping, Civil aviation, Posts & Telecommunication, Roads & bridges)

Public Works

Grants and Subsidies(Food Subsidy, Fertilizer Subsidy, Gas Subsidy, etc.)

Disaster Management

Relief on account of Natural Calamities, etc.

The Govt. incurs a huge amount on the aforesaid expenditures and therefore to meet such huge obligations, it requires a lot of funds. Requirement of such funds is met from channelizing revenue of Govt. from numerous sources, of which, revenue collected on account of Direct taxes contributes significantly. So if you don’t file your taxes, Govt. doesn't gets its statutory dues, consequently the Govt. would not be able to discharge its responsibilities and consequences will follow, that will ultimately affect the Society (including you) and Nation as a whole.

From a different perspective, someone could argue that why should I pay Income Tax I am already paying Indirect Taxes on Goods & Services?

You must be paying Indirect Taxes on goods and services consumed by you, but owing to the drawbacks of levy of Indirect Taxes, it is necessary that the tax levy cannot be shifted to only Indirect Taxes as burden of Indirect Tax is equal on each and everyone irrespective of their paying capacity, which is adequately considered while levying Income Tax.

Only when the taxpayer’s will pay their taxes timely and with due integrity, the Govt. will get its Income tax and then only the Govt. shall be able to discharge its liabilities towards the citizens/residents of the nation, and this is why YOU SHOULD PAY INCOME TAX.