ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The benefit principle is a concept in the theory of taxation from public finance. It bases taxes to pay for public-goods expenditures on a politically-revealed willingness to pay for benefits received. The principle is sometimes likened to the function of prices in allocating private goods.

Detailed explanation-2: -The ability-to-pay Principle of taxation maintains that taxes should be levied according to a taxpayer’s ability to pay. Accordingly, the principle holds that those individuals, businesses, and corporations with greater ability to pay taxes-measured by income and wealth-should pay more.

Detailed explanation-3: -The Benefit Principle… ▪ According to the benefit principle of taxation those who reap the benefits from government services should pay the taxes. ▪ The benefit principle holds that people should be taxed in proportion to the benefits they receive from goods and services provided by the government.

Detailed explanation-4: -The tax which an individual has to pay should be certain and not arbitrary. According to A. Smith, the time of payment, the manner of payment, the quantity to be paid, i.e., tax liability, ought all to be clear and plain to the contributor and to everyone. Thus, canon of certainty embraces a lot of things.

Detailed explanation-5: -benefits received-A concept of tax fairness that states that people should pay taxes in proportion to the benefits they receive from government goods and services. Summary. Two criterion used to measure fairness in taxes are benefits received and ability to pay.