Tax Policy of a country | Canons of 'Taxation'

Any government developsits own priciples while adopting a tax policy. These are collectively referred to as cannons of taxation.
These were first developed by Adam Smith in his book entitled 'Wealth of nation'. Bastable and other modern economists have added to it

Canon of Equality/Equity

High earners should be imposed high tax than low earners

Canon of Certainty

Tax payers should feel certainty regarding

• time
• place
• tax amount
• procedure for tax payment

Canon of Economy

The collected expenses of tax should be less than the amout of tax collected so that a surplus of public revenue is generated in the country

Canon of Convenience

Tax system should be simple enough for ordinary peoples

• to understand
• to follow

 Time, procedure and place of payment of tax should be convenient to taxpayers

Canon of Productivity

It just means that funds raised by government through taxes should be utilized by the government in productive sector of the economy

Canon of Elasticity

Instead of being rigid, tax rates should be  made more flexible as per thechange in tax payers income properties and transactions.

Canon of Diversity

The tax system should be dependent on different sources of revenue.

Canon of Simplicity

A good tax system should be easily understood by the general public.Tax payment procedure shouldnot be lengthy

Canon of Neutrality

Tax system should be according to the quality of goods so that there is neutrality between the production and distribution aspect of the nation

Canon of Co-ordination

You understand it! It simply means that there should be coordination between various taxes raised in the country.