The tax system; a tool for boosting underperforming components of an economy.

[slapper]

Tax policy can stimulate sectors, but to term it as a tool is make it sound more specific than it is. It works sometimes, and frequently it puts about some unintended tilts.

Governments zero taxes on certain industries, and you will get investment, but it is usually the wrong kind. Not long-term but speculative capital searching out arbitrage. The agricultural industry case study is instructive: it is not the tax burden that causes farms to struggle, they just struggle because the commodity price is globalized, land concentration benefits scale, and unpredictability in climatic conditions makes planning impossible. Eliminating taxes does not help with that. It only makes it a little more profitable to squeeze something out of a flawed system.

It turns out that the combination of tax policy and infrastructure investment, as well as regulatory coherence actually works. The semiconductor dominance in Taiwan was not achieved with just tax breaks. It was a result of decades of systematic education policy, investment in research and development and strategic safeguarding of major sectors. The tax element was almost incidental.

The real constraint on using taxes to boost economies is political will. Good policy in industry needs to be sustained even when it seems to be failing and democratic systems find it tough to do so. We desire quick fix solutions yet competitive advantage may require fifteen years at the least.

[shield132]

There are a few constant things in our world today, and the payment of taxes is one of them, as a matter of fact, it is one of the oldest organized activities in the world.

The tax system of various economies can however play a vital role in boosting investments, creativity and innovation in parts of the economy with low performance.

A typical example; an economy is looking to boost its agricultural sector, it can come up with policies of not taxing infact agricultural companies, that singular move can attract a lot of investments in the agricultural sector, it can also offer grants, and even low interest loans to those in those sectors.

Can the tax system even do further to boosting an economy?

Since taxes are set on everything and it's inevitable, the only way to feel relief is when you don't pay taxes. I know a few approaches about that. For example, in my country, the government frees casinos from paying taxes on the money that they put back into giveaways and rewards. While this looks good on paper, sadly, this is abused in a bad way. In honest countries, this can be beneficial.
Governments sometimes also reduces taxes on profits that companies are reinvesting into the business. For example, a medicine producer company investing money in anti-cancer medicines can get reduced taxes from the government because of the importance of new innovative medicines.

Some might say that high taxes on tobacco are good because it will help the government to shift consumption from tobacco to other healthy things but it doesn't work like that in reality and again, in my country, this is used by the government to get as much profit as possible because smoking culture is very big here and there is no way people are saying no to cigarette. The government knows it and sets very high taxes on tobacco to put more money in their own pockets.

In good countries, this can work well but in corrupt countries, it only harms people.

[EluguHcman]

A typical example; an economy is looking to boost its agricultural sector, it can come up with policies of not taxing infact agricultural companies, that singular move can attract a lot of investments in the agricultural sector, it can also offer grants, and even low interest loans to those in those sectors.

Tax exemption/reduction can actually attract investment and also lift burden off existing businesses or industries in that particular sector. But it has to be done with careful consideration. Tax is a major source of government revenue, it generates funds for infrastructure and key areas in government. So tax exemptions can only be granted when it is really necessary or in areas that wouldn't really hurt the government (that's sectors that wouldn't have generated a lot of tax revenue).

Your points are valid, the essence of taxation in the general overview is structured for the governments to generate revenues in other to facilitate on public infrastructures.
When the government oversees a business sector such that investors are in one way or the other benefiting from the provisions under the authority watch, it is expected that a specific percentage of your incomes should be remitted to the government which as a dimension of public resources could as well encourage economy development in the society.

The vice could be that it discourages investors to indulge on those wings where they may be taxed while find it hard to meet up their business goals and same time paying taxes if they are not making sufficient incomes to cover their expenses while their obligations was to make profits. So the course taxes could push them away or probably when the taxes are too high to be affordable considering how much income the makes.

[Free Market Capitalist]

The title of the thread is bullshit that doesn't match what you say in the OP, to be honest. In the title, you talk about the tax system, and then in the OP, you specify that what boosts the economy are tax exemptions. In other words, it's not taxes, but the absence of them. Or at least the reduction. And I agree with this, but you contradict yourself.

Tax exemption is a major part of a tax system. If you're exempted from tax payment, it is the policy of any tax system

Seriously, don't you see anything wrong with the title you've chosen? If you had titled it: "Tax exemptions; a tool for boosting underperforming components of an economy" would be more faithful to what you are trying to say.

The tax system is very broad, and tax exemptions are only a small part of it.

[alani123]

The tax system can be utilized in various ways but sadly what we've been seeing in the last few decades is that heads of industry lobby all world governments to prevent them from boosting industry. There is a global decline in state owned enterprises and the private sector keeps pressure on governments to not even give subsidies to private sector production. We've entered into a new era of state protected corporatism. It's crazy. The goal even under capitalism isn't maximizing production but rather protecting the wealth of the already rich.

[viljy]

If we talk about preferential taxation, this may give some impetus to the development of the industry, but only in comparison with the level of taxes that have previously stifled the industry. In other words, tax cuts alone are not enough to provide incentives. Special government funding programs are needed. Or preferential bank loans.

As for agriculture, there is a problem with intermediaries (these are speculators, wholesalers and end retailers) who deliberately lower purchase prices, and thus force agricultural producers to constantly take out loans. As a result, intermediaries make more profit than producers, while food is expensive for the end user. And it turns out a paradoxical situation: Agriculture is constantly unprofitable, despite the fact that food prices are constantly rising.

[Agbe]

The role of tax in an economy is one thing that is very important because tax play a crucial role in the life of any lively economy which is either developed or even developing. Tax is one of the things that keeps an economy going because tax collected from the tax paying public is channeled towards providing basic amenities and even put into building an environment that will be conducive for the growth of business. One good way that government has used in attracting foreign investment has been granting tas wavers to companies or by reducing the tax that is paid by these companies, this will help in attracting foreign investment into the country because some companies may leverage on the fact about the tax waiver by the government to come into such a country and invest .

[Ndabagi01]

A typical example; an economy is looking to boost its agricultural sector, it can come up with policies of not taxing infact agricultural companies, that singular move can attract a lot of investments in the agricultural sector, it can also offer grants, and even low interest loans to those in those sectors.

Can the tax system even do further to boosting an economy?

Tax system is a good method to build the economy of a nation or even boost it more, but when the tax collection is too high and no result to actually show for it, then you’ll send away people to come over to that region to invest which will not bring about improved economy. For first world countries, their tax system seems to look very perfect and they’re always delivering well the task placed upon them as leaders to help develop and boost the economy of the nation. Every sector that the government wants people to invest into and get more boost in their economy, they can just adjust their taxes in the region and overall get a very good outcome for that which leaves them to be in a profitable state still.

[BIT-BENDER]

A typical example; an economy is looking to boost its agricultural sector, it can come up with policies of not taxing infact agricultural companies, that singular move can attract a lot of investments in the agricultural sector, it can also offer grants, and even low interest loans to those in those sectors.

Can the tax system even do further to boosting an economy?

Tax system is a good method to build the economy of a nation or even boost it more, but when the tax collection is too high and no result to actually show for it, then you’ll send away people to come over to that region to invest which will not bring about improved economy. For first world countries, their tax system seems to look very perfect and they’re always delivering well the task placed upon them as leaders to help develop and boost the economy of the nation. Every sector that the government wants people to invest into and get more boost in their economy, they can just adjust their taxes in the region and overall get a very good outcome for that which leaves them to be in a profitable state still.

I know a group of kids that every day they contribute something small from their launch money, they do this for the full school term and after they term or academic session is done they use the funds from what they have saved to take themselves out to have a good time and other things, this is a simple example how the launch tax they paid was used to their own benefits.
Tax is contribution that the contributors has every right to benefit from.

[Findingnemo]

Not taxing the agriculture related products is not going to make anyone rich nor help the economy, rather the tax relief should be given to the farmers so they will have money to spend that will circulate in the economy. Tax system offers relief for those who don't need that and makes it as mandatory for most of people who are middle class people. The fair system should be taking more from rich and less from the poor but existing system works the opposite way.

[purple_sparkles]

In my opinion, for a country to succeed economically, it needs to simplify taxation for its population as much as possible so that running a business becomes easy and not something to be feared. If taxes are low and the documentation process doesn’t require specialized knowledge, people will be more motivated to start and develop their own businesses. Government programs for education and grants for starting a business would also contribute to economic growth. Only in this case does the tax system become useful and actually help the country develop. But if the opposite is true, high taxes, even higher fines, and complicated reporting,it will only push people away from legal business. It will be easier and cheaper for them to operate in the shadows or to register a business in another country where the conditions are more favorable and pay taxes there, supporting someone else’s economy instead of their own.