Income Tax and Public Expenditure
Income tax is the kind of tax collected from individual’s incomes by a government of a country so that it gets enough funds to cater for the public expenditure. Public expenditure entails the spending by the government to the state so as to uplift the living standards of the citizen. Government expenditure is very crucial in a country since it boosts the economic growth and development of a country. Many countries especially third world countries have stagnated in terms of development due to poor allocation of the public resources.
It is true that income tax constitutes the largest percentage of the government income and without it; many countries would stagnate in terms of development. Individuals of a country have got used to the routine income taxation and thus they do not feel any burden when paying the tax since it assists them in an indirect way. There are various ways through which income tax is helpful to individuals of a country.
Equitable Income Tax among Individuals
Paying tax is not a burden. Before the introduction of income taxation, people were enjoying their full salaries without any deduction and thus they could develop their lives well in expense of others who have been marginalized with poor salaries. These people with low incomes and others earning totally nothing could not benefit at all and thus the governments saw it crucial to tax individuals so as to have equitable state development. Money got from income tax is used to develop infrastructure.
We find that in many countries roads have become very poor and quite a number of accidents are reported on daily basis due to poor infrastructure. Since this is a public facility, it must be executed by the government of that country and needs funds. However, the government goes straight to the treasury and makes use of the funds got from income taxation and the task on infrastructure is immediately executed.
Distribution of Income Tax on Public Projects
It is true that many learning institutions and also health facilities operate under management of the government. People may wonder where the government gets all this money to sponsor thousands of schools and hospitals. All these funds are got from the income tax that every individual of a country pays. This means that the tax that we pay helps us a lot and we are supposed to appreciate taxation.
Creating Public Projects for Future Using Income Tax
Future generation will also benefit a lot from the development that is done by the use of the funds from taxation for example; a school that is built today using money from the pockets of individuals will actually help the future children and this will reduce expenses at that time simply because everything will almost be catered for by the government. The government has really subsidized many commodities and services in the market. We find that after the national budget of a country is read out, many good and services seem to reduce in their prices and this is actually direct price subsidizing where money for that is got from the tax that we pay out of our incomes.