If we didn't have roads, marching against government policies would be filthy. We all know Governments have unofficial license to steal. They would buy water cannons with your stolen money and give you mud baths when you go marching against them.
Taxes make the governments a little bit accountable to the public and to pose good intentions, governments love to show off by building roads and infrastructures and take credit for it. You've paid for it of-course but there aren't enough cynics in the world to establish it as a common understanding.
So far we have mentioned the Governments and the public. Each has to play their own part to sustenance of Economic growth, improve quality of life and uniformity in society in general.
There are various forms of taxes mainly income taxes, sales taxes, corporate taxes, tariffs and estate taxes. Governments are the collector in all cases but tax revenues reach government pockets through various channels. Most interesting to me is the sales taxes because of it being an amazing tool to gather tax revenue when people don't want to pay taxes. With general sales taxes, most of them would not even notice how much a year they are paying government in terms of sales taxes.
If I were to theorize about the general sales taxes, I would just need a minute of contemplation & I would say countries with lower corporate activity might have higher GST rates. Lower income would also drive them higher. I say that based on a simple premise that because governments have to spend a lot even when nothing special is going on, which makes taxes inevitable. With lower per capita income, enforcing higher income taxes down people's throat would seem cruel so to grab something from the lower income classes, governments have to rely on sales taxes.
Cursory research over the internet would reveal that indeed a visible proportion can be observed between GST as the percentage of GDP and status of a country on the development scale. Developed and transitional economies tend to rely on the higher corporate taxes and income taxes and even when the sales taxes are substantial, those sales taxes taxes are the major portion of the economy's GDP. Developing nations/economies on the other hand, always created means through indirect taxes. Consumption and sales are even prevalent in war ridden countries so as long as people are spending, governments are comfortably making enough to run their operations.
Sometimes it seem like a certain developing economy might transition and be turned into a developed one but decades go by and nothing changes. There are many possible reasons why the underachieve most of the time.
1) Political upheaval has such a hefty mass weighing down nations' economies in modern day world. A few bad politicians might not be able to demolish it fully but generations of bad politicians in the form of nepotism, as seen in most developing nations, can put a put a pause on growth for longer periods of time. Hence government revenues are drawn from indirect methods and private sector and innovation in business never take off.
2) Underdeveloped countries are likely to have lower literacy rates, hence the trend to contribute through income taxes is lower. This is a very painful dilemma as a lot of things here are interdependent and these are failing at the same time. Either everything works or nothing does. For instance, low literacy rates are caused by the bad political environment and governance, and lower literacy rates are almost to blame for the corruption. People in these conditions are less likely to detect malfunction in the system and eventually they get used to it. Corruption does not bother anyone anymore. Since most of the corporations working in these economies are foreign and they have enough money and persuasion to manipulate authorities in devising tax brackets and tax rates in their favor.
3) Income taxes already amount to a small share of the GDP in the developing economies but the worst thing is the revenue being wasted in high operation costs in the form of collection and administration by the authorities.
4) Undocumented economies are also a thing. Sometimes people do fairly well in some economies and yet in their lifetime nobody asks them for taxes. Small to medium shop owners are likely to take advantage of such situation. Although these small business are for righteous reasons yet they seek to hide from the government eye, decades go by and they never have to reveal their true income and thus no audits either.
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