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.

[alastantiger]

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

Well yes, i do believe the tax system can do even more to boost an economy by guiding behaviour and creating the right environment for growth, when taxes are fair and supportive they encourage businesses to expand just like the example you gave, it attract both local and foreign investors and help new ideas grow basically, reduced taxes can increase spending power, create jobs, and support small businesses while smart incentives can push people into productive sectors, but for this to truly work the system must be simple, stable and trusted because when people understand taxes and see real benefits, they are more willing to participate and contribute to economic growth than fight and resent it.

[safar1980]

The tax system is very unfair. I've read a lot of news about large corporations being exempted from taxes and receiving significant benefits, while small businesses are becoming more difficult to run due to numerous new regulations. It seems like taxes aren't going up, but starting a business is becoming more difficult. Look at the prices lawyers charge for incorporating a company in Europe. The process should be easy and inexpensive, but it isn't.

[Fortify]

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?

What you're really talking about is subsidies which can be different than taxation, reducing taxes in a certain area can be an incentive that encourages further investment but is just one lever available. The tax system is not built or intended solely for this purpose, so it's dangerous to think that is the primary reason for taxes - it is just one small element or way they can be used. Taxes are used to fund all kinds of things, like the government, military, emergency services, infrastructure like roads, etc. Talking about agriculture specifically, it can be very important for a country to have a strong agriculture industry because it gives a little more independence and less reliance on imports, but it's a fine line to walk and subsidies can often be targeted in trade negotiations because they usually give an unfair advantage versus overseas suppliers.

[Cryptomultiplier]

In my country, the new implemented tax reform aims to improve the economy by increasing domestic investment, boosting sectors like agriculture, infrastructure and renewable energy and encourage entrepreneurship due to high rate of unemployment.

However, the fear is that only those at the top, being the leaders, get to benefit more from this, while the lower economy classes get to have increased cost of living with price hikes hitting almost every other week and insecurity being a major music to dance to if caught unawares.

[Royal Cap]

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

Another important aspect for me is to reduce the pressure on small businesses. If you have to pay high taxes at the beginning many good ideas will not come forward. Again if you give new entrepreneurs a tax break for a while, they will have a chance to stand, however I think it is not enough to just reduce taxes people should see that the taxes they pay are being used in the roads, education or health sectors, then the mentality of paying taxes will also change. Ultimately a balance is needed so that the government gets income and people also have the opportunity to move forward.

[Nanga Parbat]

In my country, the new implemented tax reform aims to improve the economy by increasing domestic investment, boosting sectors like agriculture, infrastructure and renewable energy and encourage entrepreneurship due to high rate of unemployment.

However, the fear is that only those at the top, being the leaders, get to benefit more from this, while the lower economy classes get to have increased cost of living with price hikes hitting almost every other week and insecurity being a major music to dance to if caught unawares.

The government also collects taxes so that it can promote every class equally so that the economy remains balanced.If the government creates resources for the common people instead of imposing taxes on one place then only will the country progress.Just as there are fewer hospitals in villages the government should take advantage of the taxes and establish hospitals so that the people living there can get relief from any illness. If the government imposes tax money on the upper class the common people can never progress in life.It is the responsibility of the government to take care of the well being of the people and provide them with a better life.

[abhiseshakana]

The tax system is very unfair. I've read a lot of news about large corporations being exempted from taxes and receiving significant benefits, while small businesses are becoming more difficult to run due to numerous new regulations. It seems like taxes aren't going up, but starting a business is becoming more difficult. Look at the prices lawyers charge for incorporating a company in Europe. The process should be easy and inexpensive, but it isn't.

Based on classic fiscal theory and Keynesian, tax is economic engineering tools for imbalance correction, economic cycle stability tools, public goods development funding and tolls for economy incentive and economic protection with assumption government has competent bureaucracy (good governance) and zero corruption practice.

But reality in my country and many developing and poor country tax nota a tools for boosting underperforming component but tax being use as  tools for deficit /debt settlement & maintaining fiscal continuity. If we trace, government annual budget made by country revenue plan, if there are deficit, government issued debt and pay interest and principle debt and tax to citizen always be a solution to this practice, Tax become cashflow servicing not productive development sector funding. From this policy we can see, when government taxes citizens, debt and interest payment are safe, government keep political stability and deficit not exploded.

Frankly speaking, in my country tax fail transform my country economic condition, it only tools for government and political elite to fulfill their liability (solvability)