On Taxation and Tax Payer Responsibilities

A country is similar to a home or a family when it comes to money.

Family and Money

Any family has an income and there are expenses to meet. Expenses could be against the 3 very basic needs of every human being - food, clothing and shelter, besides other needs like entertainment, consumables, health, hygiene etc. A family has to spend mandatorily on these essential needs to survive and lead a decent life. Cutting out the expenses from income results in surplus/debt, depending upon which one is higher.

Country and Money

Any country has its own needs to satisfy, like creating and maintaining public infrastructure, taking care of its subject's health and hygiene, providing education, managing natural resources, regulating energy creation and distribution, maintaining law and order, regulating financial instruments to prevent fraud, ensuring safety, security and sovereignty of the nation and finally to nurture the governance engine that manages all these. A country has to mandatorily spend on these essential needs to stay as a respectable country in the face of the world. Cutting out the expenses from income results in surplus/debt, depending upon which one is higher.

Income of a country

Income for a family is earned through either manual work that creates a product or provides a service. Where does the income for the country come from? Is it by taxing its subjects? Predominantly, yes. But a country's economy cannot grow just by just taxing its subjects. There are other means to do it, similar to the way a family earns, by providing products/services to other countries, which can be done by private corporations or state owned enterprises. Products could be the export of industrial/agricultural produce or natural resources like minerals, fossil fuel, coal etc. Services could vary from building an oil well in the gulf to help setting up an academic institution in Korea. Though I am tempted to write all I know on this, I am refraining to do so, in the interest of the reader. ;-)

Tax as an income for a country

So why a country has to earn through taxing its people? Consider, a small group of people living without any government, like ancient civilizations. This community will have some common needs like security, drainage, canals for irrigation etc. These needs cannot be met for and by each and every individual on his own. So they need to get this done by the community as a whole by equally sharing the cost/work. The needs of the country stated above are services that citizens provide to themselves much like this community. However the community can set up a body which will use the surplus of the common money to grow in various ways. Also the community can sell the resources of their land to another community and make money. When a country has very low income from sources other than tax, then the tax rate is higher or the services are of low quality. Hence if the non-tax income tends to zero, then all the services provided by a country to its citizens are taxed, which is actually eating into one's own wealth - a state of decline. In the colonial era, colonies were used to extract wealth for a colonial power and hence the dependence on tax for such countries were less - e.g., the UK. But in the current world, such a country has to find various other avenues and means to develop income outside the tax to keep its subjects happy, by charging them less tax. But tax is inevitable.

What are the various taxes on a citizen?

Do you know the various ways a citizen is taxed? The obvious and the major one is income tax. Apart from that, each and every product or service we buy, from soap to a computer or eating in a restaurant to using the internet, is taxed. Not only this, there is also a road tax, a wealth tax, a property tax, a water tax and so on. This is as per the conditions in India, though it may not vary much across the world. Also, most of the countries siphon out a large piece of the cost of fossil fuels as tax.

Use of Tax payer's money and Tax payer's responsibility

Where do all these money go? It seems to be a hefty sum. So it is. All this money is spent against the above mentioned services a country provides, besides developmental projects and helping the poor and downtrodden. A country that efficiently uses tax payers money certainly prospers, like Singapore. It's also each and every tax payer's responsibility to make sure that the money is spent in the right way. You have the right to question an expenditure by the government through appropriate legal procedures. Right to Information (RTI) act is a catalyst in that process. In most of the democratic countries, besides the legal procedures other peaceful means to stop waste of tax payers money is allowed. So, what are you waiting for? Go ahead and question the authorities for your rights. If there are no proper roads or lighting in your area and if you pay all your taxes promptly go ahead and question the authorities.