Taxation has been one vital aspect of the modern government policy and revision in this policy is being expected and is being observed in every year budget announcement. The policy of taxation is revised and amendments are being made on this because of the economic conditions and the circular debt on the country and that is why taxation is considered to be one vital source to strengthen the capital of the state and the expenses can be met.
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The modern policies of taxation which are being formed by the finance ministry of the respective state is not just to increase their capital so that they can meet their expenditures but at the same time they do have various purposes and plans which are being associated with the finance collected under the heading of taxation in any country. The following are the main aim of the modern government behind their policy of imposing taxes on the nation;
Stabilization: The very initial and major purpose of the taxation is to strive for bringing stability in the national economy as their stabilization can be done through increasing the level of employment opportunities by starting new projects and business, stabilizing the prices of various products which are interlinked with the international market most significantly Oil and Gold, and finally the unwavering of the balance of payments through the respective fiscal year.
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Distribution: The tax structure which is being derived in any nation has two purposes in this process. One is to collect the tax appropriately and the second purpose is to redistribute it amongst the various individuals, classes and communities in the population which are in need of the financial assistance from the government.
Allocation: The most important and crucial phase in the taxation is allocation of the collected taxes, if the people and the nation will not see any comprehensive and productive allocation of their taxes they will start opposing the taxation policy and that will lead a dramatic increase in the list of those people who are liable to pay tax but do not pay it and save it after getting involved in various tactics. The allocation of tax may be done to increase the productive activities which might include general savings, reducing money consumptions, civil work, giving new employment opportunities, improving educational sector, empowering the judiciary, enriching medical and health facilities and stabilizing and strengthening the law and order enforcement agencies of the state.
