Question 1 Research has shown that prosperous countries (generally developed countries) have higher tax to Gross Domestic Product (GDP) ratios. This is generally achievable due to the broad tax base and lower levels of societal inequality. In developing countries, taxto-GDP ratios are much lower. High societal inequality further results in even progressive taxes being levied on few and regressive taxes being (politically) unfavourable due to the impact on low-income earners. Research and critically analyze the above statement by making a comparison of tax to GDP ratios between developed countries and developing countries.

Question 2 The tax system should be an efficient one and the expenditure of the government should be limited to that which is absolutely necessary. Economic theory demonstrates that taxes clearly draw resources from both efficient and productive use in the private sector (which is ensured through market forces) and less efficient use in the public sector. As governments are not subject to the same market forces to compel the efficient use of resources, the consequence of the failure of policies towards which government expenditure was put are not severe, often allowing the wasteful behaviour to be perpetuated. Productivity of the economy suffers as a result. Research and critically analyze the efficiency and implications of tax policies in the Private sector. Moreover, compare with the policies for tax in the Public sector.

Write up: The assignment should be presented in the same style as a published journal article in the specified headings as shown below: Referencing: Footnotes and Harvard referencing style, word limit of 3500 words

Answer rating: 100% (QA)

1 Taxes are a critical measure of a nations development and governance The taxtoGDP ratio is used to ... View the full answer