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Why I think Government should abolish corporation/business taxes.
Why I think Government should abolish corporation/business taxes.
Only people can pay tax, so a tax on business is a tax on somebody - the question is who?
There are three groups involved in every commercial venture (1) The shareholders (2) the employees and (3) the customers. A tax on business must be paid by one of this group.
It is either it paid by the shareholders through reduction of profits, or the staffs in reduction of salary, or the customers in a slight increase of goods or services – there is no other way to cover a business tax.
To know how businesses respond an exercise was conducted in UK to see how Tesco responded to an increase in taxes. It came in the form of a slight increase in the prices to customers – so a business tax is a duty on the consumer. Also – the UK government imposed an extra levy on banking recently and it filtered down to the customers.
If we eliminate business tax today it will fitter down to reduction of prices in competitive industries.
There is nothing wrong with this form of indirect tax but it is better to adopt the right language and call it what it is.
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Salim Solaiman 50+
Yes price may go down mostly in cost plus pricing model ...... , in such case Government will get that missed tax again from people......because it survives on tax money.....so net impact on people will be same.
Moreover tax free will not garuntee price reduction by the companies.......
Just an example , in Saudi everything is tax free, but the price of the goods of same brand are same like any other countries....
Ehis Odijie 10+
Meaning the prices would be much more if there was a tax. Understand that there are so many market forces that affect the price of a product. Is Sadui practicing any form of import regulations in form of quota or tariff (which is another roundabout tax on the consumer) ? There are so many questions to ask - it is not enough to say everything is tax free. If that is the actual case, prices cannot be the same in other countries - It defies economic logic. The question is what do you regard as tax?
Salim Solaiman 50+
However let me clarify more Saudi example.....while you are proposing for waiver oif corporate tax ...I was talking about all taxes on products of services....e.g. VAT, Sales Tax, Customs Duty etc etc..... sorry for mixing up.
What I know Saudi does not impose any qouta or tariff on any products. Moreover the companies there are predominantly Saudi owned (powerful ones) , so I doubt of exitance of any corporate tax ......as the King has enough money from oil to run meager expense for people at large.
Ehis Odijie 10+
So, in a technical sense, it is impossible for a tax free country (practicing free trade) to buy products with the same price as those of taxed countries.
Salim Solaiman 50+
What about the practicle issue of parallel trade or smuggling due price disparity in neighbouring countries for global brands?
Some exceptions are there also like Cars , are much cheaper . May be it is due to the reason , parallel trade or smuggling of Car is not that easy or feasible