Advantages Of Direct Tax

Direct taxes have the following advantages in their favour;

(i) Equitable:

The burden of direct taxes cannot be shifted. Hence equality of sacrifice can be attained through progression. Of course, the very low incomes can be exempted. This cannot be achieved- by taxes on commodities which fall with equal force on the rich and the poor. The tax raises the price of the commodity, and the price of a commodity is the same for every person, rich or poor.

 

(ii) Economical:

The cost of collection of direct taxes is low. They are mostly collected “at the source”. For instance,-the income tax is deducted from an officer’s pay every month. This saves expense. The employer acts as an honorary tax collector. This means great economy.

 

(iii) Certain:

In the case of a direct tax, the payers know how much is due from them and when. The authorities also know the amount of revenue they can expect. There is certainty on both sides. This minimises corruption on the part of collecting officials.

 

(IV) Elastic:

If the State suddenly stands in need of more funds in an emergency, direct taxes can well serve the purpose. The yield from income tax or death duties can be easily increased by raising their rate. People cannot stop dying for fear of paying death duties.

 

(v) Productive:

Another virtue of direct taxes is that they are very productive. As a community grows in numbers and prosperity, the return from direct taxes expands automatically. The direct taxes yield a large revenue to the State.

 

(VI) A means of developing civic sense.

In the case of a direct tax, a person knows that he is paying a tax, he feels conscious of his rights. He claims the right to know how the Government uses his money and approves or criticizes it. Civic sense is thus developed. He behaves as a responsible citizen.