![]() It is because India is a democratic country and is expected to invest in social welfare and infrastructure. India’s current tax system is progressive in nature, with tax rates going up when the income level goes up.New Zealand in 1980 did away with deductions and write-offs and instead applied the lowest rates on average workers. With higher compliance, New Zealand is one of the countries with the best income tax practices.Īlso read – Precision farming in India – Features, Merits, Demerits and Challenges What are the arguments against? New Zealand is called BBLR (broader bases and lower rates) country. In New Zealand, the tax law experts focus on taxing a lot of actions at a low rate, or flat rate and most importantly at the simpler tax code.Russia’s income tax revenue has grown by more than 50% since people found it fair and easier to pay. Russia adopted a 13% flat tax rate in 2001 and its economy expanded by about 10 percent since then.However, it adopted a flat tax in 1947 which resulted in higher compliance rate and drastic economic growth. Hong Kong was one of the poorest country during the World War II. ![]() Best examples of the flat tax system are of Hong Kong, Russia, and New Zealand.A flat tax rate of 12% would be appealing even for the low-income people and the compliance rate will increase by eight percentage points to 33%.While simplification and better administration of the law are major reforms that India requires, some economists even suggest going for a flat tax system or lower tax system.
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