Tax Syatem

1810 Words8 Pages
What is a tax system? A tax system is a system that helps the government to collect taxes from citizens in order to increase revenue to cover the government expenditures. There are many objectives of implementing a tax system. One of the main objectives of a tax system is to narrow the gap of the inequality in income distribution. Narrowing the gap of the inequality in income distribution is important as inequality in income distribution causes poverty and has negative effects on access to education, housing, food, healthcare, pensions and life expectancy. (Sikka, 2008). There are two types of tax system that is widely used in different countries worldwide, namely progressive tax and flat tax. Progressive tax is a form of tax in which people who earns higher income pays a higher sum of tax. This is because their taxable income is higher. Progressive tax takes more from those who are capable to pay more (IRS, 2013). On the other hand, flat tax is a type of tax in which all workers are taxed at the same rate regardless of the amount of income they earn. This means all levels of income are taxed at the same rate. There are both pros and cons of both the tax systems. However, many people have been arguing that a flat tax, in which everyone pays the same rate regardless of income, would be a more equitable and desirable tax system. In Malaysia, the tax system that is used is the progressive tax system in which the higher the income one earns, the higher the amount of tax they have to pay. Nonetheless, a better tax system should be the flat tax system as it is more beneficial to the country in many ways. This is because of the many advantages of a flat tax system. A flat tax system is simpler, leads to a higher productivity and economi... ... middle of paper ... ...han the progressive tax system. This is because the flat tax system is fairer and more equitable for the citizens. It charges one flat rate to all citizens. Furthermore, the flat tax rate charges one low flat rate to all. Thus, people would be more willing to comply and would not evade tax. Besides, people would be more willing to work hard which will increase the productivity of the country. Besides the pros, it also has its cons. The flat tax might generate lower revenue for the country as it charges a lower rate. On the other hand, the progressive tax is known to generate higher revenue for the country but it is unfair to successful and productive individuals because the more they earn, the more they pay. Also, it discourages people from working hard which cause a lower productivity level for the country. All in all, the flat tax system is better for our country.

More about Tax Syatem

Open Document