Sample Solution

Every tax should be levied in such a manner and at such a time that it gives the tax payer maximum convenience. Tax in the UK is generally collected by either taking from the tax payer before they receive the rest of the money, known as the Pay As You Earn (PAYE) system, or they pay it directly to the government (HMRC).

Economy

The cost of collecting tax should be the minimum so that a major part of collection is towards the treasury. If administration expenses consumes a large portion of tax revenue, it cannot be said it is a good tax system. Tax systems vary around the world due to historical and institutional differences, but any good system must seek the least aggregate sacrifice in its tax policies. For 2018, the UK government spent 2% of their total spending on general government where HMRC is included (Chantrill, 2019).

Extra Characteristics

Simplicity

Tax should be so simple that any tax payer can understand its computation and complications without the help of an expert. It would also reduce the chance of tax evasion as it will not bother the individual to pay tax. A simple tax system is also beneficial for the government due to spending less time and money. A tax system that treats similar economic activities in similar ways for tax purposes will tend to be simpler and avoid discrimination between people and economic activities. However it can sometimes be efficient to discriminate between different activities for tax purposes, such as UK taxes on alcohol and tobacco, and other things that harm others and the environment.

Desirability

A tax should be desirable so that the government may defend itself against public criticism, by supporting its expediency. An unjust tax will always face sharp unwillingness on the part of the tax payers to pay and they will try to evade them, every new tax must have a justification to create a feeling of acceptance. Dalton stated that “in a good tax system, there should be a double illusion that the rich should pay more than what they think they should, so the rich will be contented and the poor be