The motives behind taxation..

The motives behind taxation, what they want to achieve.

In the nineteenth century, taxation was levied mainly for revenue purpose as the main concern of the government for the provision of defense and the maintenance of law and order in modern times, this taxation has a dual purpose of:

• To realize income for the state for its increasing expenditure and
• To achieve its social and economic objective among which are the following
• Reduction of inequalities income wealth: to reduce these inequalities progressive tax is on the affluent people in the society taxing luxurious goods and services, encouraging saving and regulate expenditure.
• To promote economic growth: the government can encourage investment under taking by giving tax holidays to investors and reduce tax on investment profits.
• To counter inflation: inflation arises when the quantity of money in circulation is greater than the available goods and service which money can buy. An increase in taxation without a corresponding increase in government expenditure or a decrease in taxation tends to decrease the dispensable income of the people, bringing about a decrease in expenditure.
• To protect infant industries by wide discriminatory tariffs.
• Achieve social and health ends by encouraging the consumption of harmful goods like cigarettes and excessive drinking.