Taxation – Term Paper

Consumption tax is a levy on the expenditure on goods and services rendered. This form of tax is usually indirect, and there are several types. Some of the most common forms of consumption tax include value-added tax, sales tax, excise tax and expenditure tax. 80% of the federal government revenue is from individual income tax and the payroll taxes that have been continually used to fund the insurance programs (Hyman, 2014). 11% is from corporate income tax and the remaining 9% from other sources. In2014 alone, the federal government collected revenues that totaled to $3 trillion which was equal to 17.5% of the gross domestic product (GDP). Some of the revenue that the government depends on is from the federal excise taxes which is more of a consumption tax that is levied on the goods and services purchased like gasoline and beverages.

 Taxation Trends

State aid has been shown to have crested in the recent past considering the bulk of the government expenditure. The property tax is also another important trend that should be monitored continuously and has increased in the recent past as well. Regardless, there will be probably no significant increments on the same because it is one of the unpopular forms of government revenue. A significant reversal would, therefore, occur in the property tax long-term trends. The government’s reliance on charges still continues and prospects assert that it will go on in the future. The fact that citizens are showing resistance to tax coupled with the increasing demand for foods and local services provides the best possible solution to the budget issues (Hyman, 2014). Technology has also made it easy to tax individuals hence the substantial growth in the revenue.

Some of the challenges that individual governments face are eternal like people having a preference for those sources of income that are almost invisible like the sumptuary taxes (Bandyopadhyay, 2015). Also, following the trends in government revenue, particularly during the 2007 to 2009 recession, the federal government faced a lot of challenges. It also provided the opportunity to reform the financial and economic system of the states. The primary goal and priority of local governments regarding their goods and services are to create a five-year financial plan, customer service and employing a unified communications strategy. An opportunity for local governments comes in the form of co-production where professionals and citizens share the power to design, plan and deliver goods and services together. This mode of delivery allows the stakeholders to appreciate that each of the partners contributes significantly and are both vital for its success. Regardless, the local governments will experience challenges still in collecting revenue from taxes because people dislike them (Bandyopadhyay, 2015).

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Performance budgeting is a paramount tool that can be used to improve the whole process of budgeting of the federal government.  It involves the utilization of performance measures to make informed decisions. It is through this tool that governments can reduce and eliminate unnecessary expenditures using performance measures. States like Sunnyvale, CA use accounting data to allocate the budgetary resources to its citizens.

Tax policy refers to the government’s power to decide which tax to levy as well as the amounts. According to reports, corporate income tax rates has been shown to reduce in many countries (“New corporate income tax policy,” 2010). The rate at which it decreases is, however, varying throughout the countries. It is however projected to decline in many countries in 2016 than in the last two years.

 Reference

Bandyopadhyay, S. (2015). Local government finance: challenges in revenue-raising at the Municipal Corporation of Delhi.Commonwealth Journal Of Local Governance, (16/17), 60-84.

Hyman, D. N. (2014). Public finance: A contemporary application of theory to policy (11th ed.). Stamford, CT: Cengage Learning.

New corporate income tax policy in corporate restructuring. (2010). China Law & Practice (Euromoney Institutional Investor PLC),24(9), 53.