The Responsiveness of Tax Yield to Increases in National Income

Mohammad Zubair Khan

Abstract


Taxes are the most important element responsive to government
policy and in effect the major instrument for mobilising the increments
in national income for investment or expenditure by the state. However,
there are severe administrative and political limitations to the extent
to which additional taxation measures, such as the expansion of the
base, increasing the rates, or imposing new taxes, can be resorted to
for increasing the flow of tax receipts. Hence, to meet the ever
expanding expenditure requirements of the public sector, the tax
structure must rely on its built-in flexibility. The structure of
taxation should be such that an increasing portion of the increments in
national income gets automatically channeled into the public exchequer
without basic budgetary alterations.

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DOI: https://doi.org/10.30541/v12i4pp.416-432

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