Analysis Of Adam Smith’s Canon Of Taxation With Regard To The Present Tax Regime
- IJLLR Journal
- Jun 9
- 1 min read
Sai Bharanya Reddy, KIIT School of Law
ABSTRACT
Taxation plays a crucial role in modern economies as it serves as the primary source of revenue for governments. The cannon of taxation, initially proposed by economist Adam Smith in the 18th century, provides a set of guiding principles for creating an effective and fair tax system. This abstract examines the key principles that make up the cannon of taxation and explores their implications in today's economic landscape as well as the taxation system. The cannon of taxation encompasses four fundamental principles: equity, certainty, convenience, and efficiency. Equity ensures that taxes are levied based on an individual's ability to pay, promoting fairness and distributive justice within society. Certainty advocates for clear and predictable tax laws, reducing uncertainty for taxpayers and encouraging compliance. Convenience emphasizes the importance of a streamlined and efficient tax collection process, minimizing administrative burdens and costs for both taxpayers and governments. Lastly, efficiency requires taxes to be structured in a way that minimizes disruptions to economic behaviour, ultimately maximizing overall welfare.
In assessing India's present tax system through the lens of the canons of taxation, it becomes evident that while strides have been made, significant room for improvement persists. Addressing issues of equity, certainty, convenience, economy, and flexibility demands holistic reforms encompassing legislative amendments, administrative enhancements, and technological integration. By aligning policies with these canons, India can strive towards a more equitable, efficient, and adaptive tax regime, conducive to sustainable development and prosperity.
Keywords: Taxation, Cannon of taxation, Adam Smith, Equity, Certainty, Convenience, Efficiency, Economic behaviour, Welfare maximization, Public finance, India, Present Scenario
