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Sound tax policy
Economic 09/09/2024
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Most economists around the world agree that sound tax policy aims to achieve social justice and is not a source of closing the budget deficit and is sometimes used to combat spending activities that cause inflation.
These experts argue that if the goal of tax policy is limited to trying to cover the deficit in the general budget, then this is an indication of weak economic management and the loss of social goals in distributive justice, achieving social equality, and building the foundations of economic stability.
It is well known that tax revenues in non-oil countries constitute the largest proportion of their budget revenues, provided that they take into account social aspects through a policy of controlling prices for all products and are devoted to supporting prices for essential life goods that touch the low-income segment. In addition, ensuring that the tax does not affect the purchasing power of citizens, especially the vulnerable classes among them.
To clarify this theory, let's go to a simple example that applies to most similar goods!
For example, if the state decides to raise the tax rate on mobile or internet recharge cards, the concerned parties must be obligated not to pass this increase on to the consumer, and the companies producing the service must bear it in the form of corresponding taxes, the benefit of which goes to social welfare and poverty alleviation programs.
Thus, the state can preserve the citizen’s purchasing power from erosion by protecting weak incomes with commodity support or tax exemptions.
Therefore, unless the tax policy has social objectives that can be summed up as protecting the poor and low-income classes, it will undoubtedly lead to repercussions on the market and increases in the prices of basic food and medicine commodities, which will inevitably affect the livelihood of those vulnerable and low-income classes more than others, without a doubt.
Therefore, sound tax policy requires a careful study of the reality of price elasticity of demand for goods and services and the establishment of a balanced mechanism when imposing it with the possibility of controlling basic prices, which is one of the goals of fiscal policy that usually accompanies the achievement of sustainable economic development goals.
Perhaps the sound tax policy is to regulate real estate investment or foreign investments and others in particular by granting tax exemptions or approving them for this development activity. These exemptions must have positive repercussions on the investment product in a manner that is consistent with achieving social goals and not taking the opportunity of tax exemption as a pretext to maximize profit and accumulate it at the expense of the public interest by monopolizing investment opportunities.
Thus, experts confirm that taxes are not a means to cover the deficit, but rather to improve and revive the living conditions and redistribute income in a fair and just manner.
This article of mine comes with the wave of calls for tax reform, and I hope that these signals will be taken into consideration as a message to those concerned with the reform paper, so that our reforms will be constructive and consistent with the orientations of the government program and its goals in achieving prosperity within the framework of real, well-studied development.
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