Review of Western Australian State Taxes 1994 - Chapter Ten - Equity
Abstract
This Chapter analyses one of the three public finance criteria used to evaluate systems of taxation -- equity. It explains and critiques the two dimensions of equity: horizontal equity (the notion that people in similar economic circumstances should be treated similarly) and vertical equity (those with a greater ability to pay should bear a greater share of the tax burden). Vertical equity, in particular, is analysed in the context of three different approaches, as supplied by the author: the "Club Australia" theory, the "Liberal" theory and the "Socialist View." Each takes a different view of what constitutes the most equitable model of taxation. The author also recognises that equity is affected by the incidence of taxation and the expenditure scheme of the tax which is collected. The Chapter concludes that a theoretical analysis of taxation systems are of little value if methods of governmental expenditure are not taken into consideration.
Text version
|