Budgeting Implementation Challenges Essay

468 WordsSep 30, 20122 Pages
Government all over the world is very much concerned with the issue of taxation because of its enormous contribution to national and socio-economic development. Tax is not a new phenomenon, it has been in existence even in Jesus time when he asked his followers to fulfill their tax obligations (Matthew 22:17-21).Tax is a fee charged ("levied") by a government on a product, income, or activity. If tax is levied directly on personal or corporate income, then it is a direct tax. If tax is levied on the price of a good or service, then it is called an indirect tax. The purpose of taxation is to finance government expenditure. One of the most important uses of taxes is to finance public goods and services, such as street lighting and street cleaning. Since public goods and services do not allow a non-payer to be excluded, or allow exclusion by a consumer, there cannot be a market in the good or service, and so they need to be provided by the government or a quasi-government agency, which tend to finance themselves largely through taxes. Generally, every government has some responsibilities towards its citizens in order to promote national development. The following are some of the various responsibilities a government has towards its citizens: (1) provision of infrastructure such as roads, schools, hospitals etc. (2) provision of employment opportunities for its citizens through direct investment,(3) servicing and payment of national debt,(4) protecting the country from both internal and external aggression so as to facilitate peace and harmony,(5) to help solve the problem of inequality, etc. As a result of modernization, civilization and urbanization, government expenditure has risen over the years. The factors enumerated above, put various governments under pressure and are faced with the task of raising more funds to meet their current and capital expenditure. For

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