Objectives of Taxation

Taxation objectives:

(a) For revenue generation to meet the needs of government;

(b) To provide fiscal tool for stimulating economic growth and development;

(c) For social function such as redressing the rural-urban population drift, curbing environmental pollution as well as promoting a decent society; and

(d) To redistribute income/wealth in order to reduce inequality. This is achieved mostly through the progressive tax.

(e) To control cyclical fluctuations periods of boom and depression is considered to be another objective of taxation. During depression, taxes are lowered down while during boom taxes are increased so that cyclical fluctuations are tamed.