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Tax Incentives Essay

947 words - 4 pages

This research will determine the effectiveness of putting incentives on tax policies in the level of tax collection of Baguio city. Its efficiency will be evaluated through the use of cost-benefit analysis, which will weigh the level of costs and benefits for the possibility of a profit for the community. As the increase in tax revenues reveal the activeness in political and economic activities of the people, it also serves as a driver in development and growth. While most of the city’s revenues come from business establishments, economic enterprises and real property according to the city Treasurer, it is intriguing how the city manages to reach their target tax collection and continue to ...view middle of the document...

Ahmad and Stein would also say that policy evaluation is necessary to weigh in the gains and losses; setting their levels will leads to efficiency and will likely benefit both the public and government institutions.
This research is somewhat aligned with the ideas of the paper “Promoting Growth in the Carribean: Tax Incentives in theory and in practice”, which gives an analysis on the factors that are required to achieve growth. The use of tax incentives in tax policies in developing countries has become more evident in the pursuit of the involvement of labor force and adjusting to the capacity of the public. Its arguments that incentives in taxes will lead to capital formation; together with the innovation in technology compose the main building blocks of growth. This paper discusses the ideal structure of a tax incentive, because according to Bes et al (2013) (as cited in Zee et al, 2002 and Artana et al, 2012), poorly designed tax incentives are likely to result in abuse of the system and will lead to more problems which will reflect badly in the economy. It then suggest that establishing tax incentives policy will require a well designed tax system that will increase tax revenue collection that will be use for government spending and should also cover compensating the costs in implementing those policies.

According to an article written in the by Michelle Remo, the problem with our country is that our tax system is not ideal and it is supported by John Nye, a professor of economics at George Mason University. According to him the different tax rates on different income levels applied on different institutions discourage the people to advancement and modernization, in order to avoid higher taxes. Launching this kind of system will increase the overall collection of taxes according to him; it is also justifiable to question the certain...

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