Taxes, fees and duties that are levied on the buyer of goods and services are included in indirect taxes. The main category of indirect taxes includes income tax, customs duties, land tax, VAT, etc. The peculiarity of indirect taxes is that it is impossible to evade them, because they are already included in the cost of goods or services.
Benefits of Indirect Taxes
For a state with a developed economic structure, indirect taxes have advantages over direct taxes due to an increase in the welfare of the population and an increase in its purchasing power.
The regularity and speed of indirect tax receipts directly depend on purchasing power. These taxes are convenient for the consumer, because they do not require certain savings, they are determined precisely by the amount of consumption of the final product in the absence of compulsory collection (if you want to buy a product, pay an indirect tax, if you do not want to pay a tax, do not buy a product). In addition, the collection and control over the receipt of this type of tax does not require the expansion of the staff of the tax service.
Disadvantages of Indirect Taxes
With all the advantages of indirect taxes, there are also disadvantages. The most serious drawback is the self-taxation of the tax. The payer independently regulates the individual tax capacity. The indirect tax is divided disproportionately to each customer's income, as a result of which the increase in the rates on these taxes becomes unaffordable for the socially disadvantaged low-income population.
Indirect taxes are fiscal in nature. In addition, there is a need to maintain a large number of personnel to monitor the goods that enter the market segment, and for its correct taxation. Customs duty requires the maintenance of a huge customs service apparatus to prevent the importation of contraband goods into the country, and as a result, the underestimation of the amount of indirect taxes.
The collection of indirect taxes runs counter to the interests of entrepreneurs, limits the amount of profit, because it is not always possible to increase the selling price in proportion to the increase in the indirect tax rate.
In order to successfully collect indirect taxes, regulatory authorities restrict manufacturers with mandatory rules for the production and sale of manufactured products.
Considering all the pros and cons of the collection of indirect taxes, we can summarize - indirect taxes cannot lead the tax system of the state, since they do not meet the basic optimal requirements of taxation. Only a rational combination of the collection of indirect and direct taxes can create a tax system that will meet the fiscal interests of the country and the economic benefits of taxpayers.
