Taxation System Of Leading Democracies Of The World - A Comparative Analysis

Vidit Pratap Singh, Amity Law School, Noida

ABSTRACT

Every individual in the world reluctantly considers taxation once per year – when the individual tax is due. Any nation's development and progress are greatly influenced by the intricate and pivotal function that taxes play. According to Burgess and Stern (1993), the primary goal of taxes is to generate funds to pay government spending in a fair, equitable, and administratively possible manner. One of the main tools for assessing a state's ability, its construction, and the power dynamics within a community is taxation (Di-John, 2006). In addition to correcting market inefficiencies and changing the way wealth and income are distributed, taxes may also be used to promote or discourage kinds of behaviour. But fundamentally, the most important function of a taxation system is to fairly distribute government expenses (Bird and Zolt, 2005). Stated differently, the goals of economic policy, which include competitive trade, fair income distribution, and effective resource allocation, must be balanced with the requirement for higher fiscal revenue (Bovenberg, 1986). Viewing the matter from a different angle, Buchanan (1984) draws a connection between taxes and justice. In his view, "justice" in taxes refers to both the amount of the national revenue that should be taken out for communal uses and the distribution of that portion among various individuals. This paper will comparatively analyze the Taxation System of the leading democracies of the world. It's interesting to note that tax systems throughout the world differ greatly from one another and show no indications of harmonization. This is noteworthy in light of the fact that internationalization of corporate procedures brought about by globalization in recent decades has facilitated decision-makers' ability to do business across borders. One area of business that has not often followed this pattern is taxes. When tax systems from different countries and regions of the world are compared, some extremely intriguing parallels and discrepancies are revealed. In this paper it will be discussed how different democracies of the world collect taxes and does it really matter who pays the taxes and what’s the base of these taxes. A quick comparison of their tax systems with those of India will be made, taking into account factors like the ratio of taxes to GDP, tax rates, time needed to comply with tax laws, number of tax payments made, ease of paying taxes, and ease of conducting business.