Tax is a financial charge or other levy imposed upon a taxpayer i.e. an individual or legal entity by state or function equivalent of state to fund various public expenditures. The Objective of tax is always for the country's benefit. It is imposed to raise government revenue for the welfare of people and to maintain the economic situation by taxing on income earners. Growth and improvement of a country depends on tax structure of that country.
The Tax structure of India, US/UK, South Africa and China is compared for the better understanding.1 In India, the tax system is a 3 tier wherein the Central government, State Government and local bodies impose the taxes. The Power to impose taxes in India is derived from Article 2652 of Constitution of India.
U.S.A. has federal structure and taxes are imposed by State and Federal Government.3 In U.S.A., the tax system is a progressive system4 and direct taxes are more in number than indirect taxes. In United Kingdom, the taxes are imposed by Central government and local government. Taxes like Income tax, Fuel Duty, VAT5 , Corporate tax etc. are imposed by the Central government whereas the taxes like Business rates, Council rate6 etc. are imposed by local Government. The UK has higher administrative efficiency in taxation.7 South Africa has two level tax system and it's too a progressive taxation regime. China is very different in its arrangement as it is a communist country following the principles of Socialism and it depend largely on taxes. It is very important to note that tax is an important element of macroeconomics8 policy of China and highly impacting its socio-economic conditions. Reforms of 19949 in China brought 26 types of taxes which further divided in to 8 categories which are turnover tax, income tax, property tax, behaviour tax, Agriculture tax, Customs etc.
TAX TO GDP10 RATIO AND OTHER TAXES AFFECTING THE COUNTRY'S DEVELOPMENT
India ranked one of the lowest amongst other developing and developed countries pertaining to the difficulty in the execution of tax law. India ranked 147 in ease of doing business which itself shows the difficulty of foreign companies and India Companies in establishing their businesses in India. This is also a reason that the foreign direct investments are keeping low in the country.11
Fiscal Space for government in a country like India depends on overall magnitude of tax revenue, being a sustainable source of Government funding. Extent of government expenditure financed by taxes is comparatively lower in India as compared to other developed countries like Canada, UK, and USA etc. In India, particularly after liberalization there was a nosedive in gross central...