The tax system; a tool for boosting underperforming components of an economy.

[CTO114]

There are a few constant things in our world today, and the payment of taxes is one of them, as a matter of fact, it is one of the oldest organized activities in the world.

The tax system of various economies can however play a vital role in boosting investments, creativity and innovation in parts of the economy with low performance.

A typical example; an economy is looking to boost its agricultural sector, it can come up with policies of not taxing infact agricultural companies, that singular move can attract a lot of investments in the agricultural sector, it can also offer grants, and even low interest loans to those in those sectors.

Can the tax system even do further to boosting an economy?

[Coyster]

A typical example; an economy is looking to boost its agricultural sector, it can come up with policies of not taxing infact agricultural companies, that singular move can attract a lot of investments in the agricultural sector, it can also offer grants, and even low interest loans to those in those sectors.

Tax exemption/reduction can actually attract investment and also lift burden off existing businesses or industries in that particular sector. But it has to be done with careful consideration. Tax is a major source of government revenue, it generates funds for infrastructure and key areas in government. So tax exemptions can only be granted when it is really necessary or in areas that wouldn't really hurt the government (that's sectors that wouldn't have generated a lot of tax revenue).

[NurseHub]

Tax system I do not see to be too good to the growth of an economy because basically it's one thing that is done by the government to only favour a certain class of people like the elites and keep the majority group feeding the pockets of the minority which are rich, the poor are more taxes than the rich in an economy you can see this from to tax exemption or reduction done to those who donated to a country hence rewarded with tax reduction yet it means that the favour is for the elites hence it could also reduce an economy through migration people could even decide to leave the country.

[letteredhub]

Can the tax system even do further to boosting an economy?

The tax system on paper is designed to promote the growth of the country's economy, the revenue from tax generation was to be utilize in revitalising crucial sectors and infrastructures to frastrack economical and social development of the society for general benefits of all classes. But let use the third world countries for an example, the taxes generated are more like dredging into the the confers of the wealthy elite, making them richer than even the state that they're able to purchase the state owned infrastructures in disguise of privatisation with the common citizens feeling no positive effects of the taxes they pay through provisions of functional social and basic amenities and facilities such as basic healthcare centres, quality schools, food security mechanisms and security etc.

Without good quality leadership to put the generated revenues from taxes into appropriate utilisation, a country's economy can't be boosted but rather decline.

[criptoevangelista]

There are a few constant things in our world today, and the payment of taxes is one of them, as a matter of fact, it is one of the oldest organized activities in the world.

The tax system of various economies can however play a vital role in boosting investments, creativity and innovation in parts of the economy with low performance.

A typical example; an economy is looking to boost its agricultural sector, it can come up with policies of not taxing infact agricultural companies, that singular move can attract a lot of investments in the agricultural sector, it can also offer grants, and even low interest loans to those in those sectors.

Can the tax system even do further to boosting an economy?

I can say about my country, which is an agribusiness powerhouse, but it's also one of the countries that pays the most taxes in the world... here we have what's called "cascading tax," where an item is taxed numerous times, like compound interest, inflating the value for everyone and filling the pockets of the government, which is bloated and spends excessively... therefore, just having a fair tax burden would greatly improve people's lives and consequently encourage new businesses, and ultimately help those who are the real developers of a country: the entrepreneur.

[Fortify]

There are a few constant things in our world today, and the payment of taxes is one of them, as a matter of fact, it is one of the oldest organized activities in the world.

The tax system of various economies can however play a vital role in boosting investments, creativity and innovation in parts of the economy with low performance.

A typical example; an economy is looking to boost its agricultural sector, it can come up with policies of not taxing infact agricultural companies, that singular move can attract a lot of investments in the agricultural sector, it can also offer grants, and even low interest loans to those in those sectors.

Can the tax system even do further to boosting an economy?

There's a couple ways that it can faulter though and the best approach to tax is often a blanket rate with few exceptions. Like a 20% corporate tax rate which is common in many places these days. However it can sometimes distort and be abused, if individuals are allowed to set up shell companies then pay themselves dividends at a lower rate than normal salaries. It needs a lot of oversight by government, but you'll also find things like subsidies (which can come in the form of tax breaks) can actually be barriers to trade agreements as they can give unfair advantage over competing overseas companies.

[Free Market Capitalist]

The title of the thread is bullshit that doesn't match what you say in the OP, to be honest. In the title, you talk about the tax system, and then in the OP, you specify that what boosts the economy are tax exemptions. In other words, it's not taxes, but the absence of them. Or at least the reduction. And I agree with this, but you contradict yourself.

[brownn]

There are a few constant things in our world today, and the payment of taxes is one of them, as a matter of fact, it is one of the oldest organized activities in the world.

The tax system of various economies can however play a vital role in boosting investments, creativity and innovation in parts of the economy with low performance.

A typical example; an economy is looking to boost its agricultural sector, it can come up with policies of not taxing infact agricultural companies, that singular move can attract a lot of investments in the agricultural sector, it can also offer grants, and even low interest loans to those in those sectors.

Can the tax system even do further to boosting an economy?

There would always be people exploiting these tax reliefs. Those who need it actually might never benefit from it.

[davis196]

There are a few constant things in our world today, and the payment of taxes is one of them, as a matter of fact, it is one of the oldest organized activities in the world.

The tax system of various economies can however play a vital role in boosting investments, creativity and innovation in parts of the economy with low performance.

A typical example; an economy is looking to boost its agricultural sector, it can come up with policies of not taxing infact agricultural companies, that singular move can attract a lot of investments in the agricultural sector, it can also offer grants, and even low interest loans to those in those sectors.

Can the tax system even do further to boosting an economy?

Most developed countries boost their agricultural sector with subsidies, not with lower taxes. Offering low interest loans to agricultural companies has nothing to do with the tax system. Lowering the taxes for businesses, that don't generate enough profits won't do the work.
There are other sectors of an economy, which have to be boosted with lower taxes. The high tech industry is one of them. Such advanced industries are producing higher added value and they can boost the overall competitiveness of an economy. The agricultural sector is important, but it produces less then 5% of the annual GDP of most developed countries, which isn't much.

[Mahanton]

There are a few constant things in our world today, and the payment of taxes is one of them, as a matter of fact, it is one of the oldest organized activities in the world.

The tax system of various economies can however play a vital role in boosting investments, creativity and innovation in parts of the economy with low performance.

A typical example; an economy is looking to boost its agricultural sector, it can come up with policies of not taxing infact agricultural companies, that singular move can attract a lot of investments in the agricultural sector, it can also offer grants, and even low interest loans to those in those sectors.

Can the tax system even do further to boosting an economy?

Most developed countries boost their agricultural sector with subsidies, not with lower taxes. Offering low interest loans to agricultural companies has nothing to do with the tax system. Lowering the taxes for businesses, that don't generate enough profits won't do the work.
There are other sectors of an economy, which have to be boosted with lower taxes. The high tech industry is one of them. Such advanced industries are producing higher added value and they can boost the overall competitiveness of an economy. The agricultural sector is important, but it produces less then 5% of the annual GDP of most developed countries, which isn't much.

Tax systems indeed play a massive role in shaping how economies grow and what sectors flourish beyond just collecting revenue governments can use tax policy as a strategic tool to direct investment encourage innovation and promote stability for instance when a country lowers taxes for startups or tech companies it’s basically creating an environment that attracts talent and capital this is how some of the biggest tech hubs like silicon valley developed a mix of tax incentives and government funding built momentum that encouraged creativity and competition.

Agriculture is often supported differently through subsidies and low interest loans but taxes can still play an indirect role governments can offer tax exemptions on equipment purchases or income from farming to lower production costs and make the sector more competitive while developed nations might prioritize tech and green industries developing countries often use tax relief to strengthen food production and rural employment both strategies are valid depending on what an economy needs most. The tax system can go even further by influencing savings consumption and investment behavior progressive taxation ensures wealth redistribution while targeted tax credits can motivate people and businesses to invest in renewable energy research or housing development in short tax policy is more than just about collecting money it’s about creating balance and steering the economy in a direction that supports innovation employment and long term growth.

[Coyster]

There would always be people exploiting these tax reliefs. Those who need it actually might never benefit from it.

The super rich and very wealthy have been the ones to benefit from tax loopholes, exemptions, deductions and ambiguity. But it is what it is and we have to accept that. Poor people usually clamor that the rich should pay more in taxes and when they find perfectly legal means to reduce what is payable, people still complain that they do not pay their fair share of taxes.

That is how the world works, people with the necessary resources to exploit certain loopholes or benefit from some kind of deduction would do it. It matters not if others believe it is "them" who actually need it.

[abhiseshakana]

Your opinion may be correct only if its effectiveness is felt by citizens, and this depends heavily on its effectiveness, which is influenced by the state's ability to spend efficiently and with discipline.

Compared to other instruments, taxes are indeed more effective in boosting welfare. Compared to monetary policy, which acts as a short-term stabilizer, taxes create long-term capacity building by developing production capacity and human resource quality. Tax coverage is also more equitable and structural (agriculture, education, and health sectors) compared to FDI (accelerating instant employment, technology transfer, and global market advertising). When compared to subsidies and social assistance, which act as safeguards, they provide social stability with low multipliers and are often leaky, poorly targeted, and create dependency. Well-managed productive taxes actually act as leverage and create public investment with higher multipliers. Compared to deregulation, taxes build the foundation, while deregulation accelerates the productive economy.

With strong governance, taxes are highly effective because they can create prosperity through: Human capital with a high multiplier effect, and hard infrastructure (roads, ports, digital infrastructure) that stimulates private investment, act as automatic stabilizers that prevent the economy from collapsing during crises and increase output in certain sectors with productive subsidies. Conversely, when governance is weak, taxes become ineffective or even counterproductive. Numerous phenomena demonstrate poor governance, characterized by high taxes but poor public services, resulting in declining tax morale and a growing informal economy. Tax distortions occur, extracting economic rents, fostering corruption, and ultimately stagnating productivity. Under these conditions, other economic instruments (FDI, monetary policy, deregulation) are actually more effective than taxes. In other words, taxes become government savings that never bear fruit.

Some examples of poor governance that prevent tax revenues from being fully absorbed into the real economy include:
- Bureaucratic inefficiency and mistargeted spending, absorbed into bloated operational costs rather than productive programs, resulting in a low multiplier effect.
- Misaligned central and regional policies, resulting in half-hearted allocations to strategic sectors.
- Corruption, leakage, and political capture by directing budgets to projects that benefit certain groups rather than the people.
- Low human resource capacity for execution.
- State spending is less productive (low multiplier) because it is allocated to consumption subsidies or stopgap social assistance, rather than productive investments. The infrastructure built is not connected to the supply chain and market, so its impact is low and slow.

[Betwrong]

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Can the tax system even do further to boosting an economy?

Yes, it can. The very first things that come to mind are those about reducing/lowering taxes here and there to stimulate spending, to encourage investment, tax breaks for companies opening factories in poorer regions ... that kind of stuff. But I think in some cases even raising taxes, making them bigger, can be good for the economy. Take, for example, a progressive tax structure. It shifts more of the tax burden onto high earners. Rich people pay more, basically. That doesn't hurt them much and, at the same time, poor people are getting a lot of help because of that. The better all people live, the better it is for the economy overall.

[palle11]

Can the tax system even do further to boosting an economy?

I think it does, tax can boost the economy of the country. Like proportional tax that has a flat percentage rate for all kinds of people irrespective of how much they earn. If a rich person earns $20,000 from his business and he is taxed 10%, that means he will pay $2,000 to the government and same 10 percent cut is done on a low income earner of $1,000 which is $100. This means the rich person still has more capital to diversify and get more workers, that will help them to feed their family etc. A proportional tax regime is capable of helping more people to get jobs because it frees more money for investment.

[Fiatless]

The super rich and very wealthy have been the ones to benefit from tax loopholes, exemptions, deductions and ambiguity. But it is what it is and we have to accept that. Poor people usually clamor that the rich should pay more in taxes and when they find perfectly legal means to reduce what is payable, people still complain that they do not pay their fair share of taxes.

That is how the world works, people with the necessary resources to exploit certain loopholes or benefit from some kind of deduction would do it. It matters not if others believe it is "them" who actually need it.

The wealthy can afford to hire the best accountants who can help them identify tax loopholes. They use diverse means to avoid tax, such as starting businesses in tax havens, donations, loans, and others.

The people who make the tax laws are also part of the rich class. This will make them make laws that will be favourable to them and their cronies.

@OP tax is a potent tool that can be used to drive the economy to any direction the leaders deem fit. 

[iv4n]

Can the tax system even do further to boosting an economy?

Of course it can, a good tax system can boost an economy, but only if it's done right. Good tax policies will make the entire country & all sectors grow and evolve. And we can find a few good examples around the world.

But there's also the other side of the coin... in many countries, taxes aren't used the way they should be. In most cases, it's some form of corruption... I guess it only matters the level of that corruption, which can vary from low to very high. And when that's involved, even the best tax ideas become useless... simply because the money never reaches the people or the sectors where it's supposed to go.

[Furball808]

Tax system I do not see to be too good to the growth of an economy because basically it's one thing that is done by the government to only favour a certain class of people like the elites and keep the majority group feeding the pockets of the minority which are rich, the poor are more taxes than the rich in an economy you can see this from to tax exemption or reduction done to those who donated to a country hence rewarded with tax reduction yet it means that the favour is for the elites hence it could also reduce an economy through migration people could even decide to leave the country.

The tax system is only favourable to the elite if not done correctly. Taxes collected should help those who need it. The higher you earn the higher you should pay of taxes and not be given the chance to evade taxes. Taxes should help the country more because the better use of money means that the country will be overall a better place to live on for its citizens, rich or not.

[Synchronice]

There are a few constant things in our world today, and the payment of taxes is one of them, as a matter of fact, it is one of the oldest organized activities in the world.

Not exactly related to this topic but just my opinion. Those who are in charge of taxes, should live like an ordinary citizen and should feel the burden of how terrible it is when you work very hard, pay half of your salary in taxes and then others live on welfare and asylum seekers get free housing, free healthcare, money and other benefits.

The tax system of various economies can however play a vital role in boosting investments, creativity and innovation in parts of the economy with low performance.

A typical example; an economy is looking to boost its agricultural sector, it can come up with policies of not taxing infact agricultural companies, that singular move can attract a lot of investments in the agricultural sector, it can also offer grants, and even low interest loans to those in those sectors.

Can the tax system even do further to boosting an economy?

If economy is looking to boost its agricultural sector, it not only should cut taxes but also should heavily invest into the development of agriculture, i.e. invest in education to educate farmers to get the best possible ROI with the current technologies, invest in engineering constantly improve technologies and make them affordable.

[CTO114]

The title of the thread is bullshit that doesn't match what you say in the OP, to be honest. In the title, you talk about the tax system, and then in the OP, you specify that what boosts the economy are tax exemptions. In other words, it's not taxes, but the absence of them. Or at least the reduction. And I agree with this, but you contradict yourself.

Tax exemption is a major part of a tax system. If you're exempted from tax payment, it is the policy of any tax system

[Orpichukwu]

When we talk about taxation, it means the amount the citizens or companies are asked to pay to the government. If such money is put into good use, it will boost that particular sector, and there is a difference between tax exemption, tax reduction and government help.

In the example you described, the government offered agricultural sectors a tax-free operation so that the money they are supposed to be paying for tax could be used for other things, and many other private investors could want to go into it since they don't have to worry about tax.

Another way to help boost an economy is for the government to offer a non-collateral loan to companies, for which the repayment period should be spread out for a long period in order for them to make a profit and be able to return the loan and still be left with capital to sustain the business.