The (a) part of this question was not difficult for most candidates, they were able to give reasonable answers to the question. However, the (b) part was a bit confusing for them. Majority of the candidates who attempted this question misinterpreted the canons of taxation to mean reasons why taxes are paid.
Candidates were expected to write the following points in the (b) part.
(b) Canons of taxation:
(i) Equity/Impartiality – This means the tax system should be based on ability to pay
(ii) Certainty – the tax payer should know the amount to pay and the time to pay
(iii) Convenience – the tax should be paid and collected at a time and place convenient for both the collectors and the payers.
(iv) Economy – the cost of collecting the tax should be as low as possible.
(v) Flexibility – the tax system should be such that can be changed to be in line with changing economic situations.
(vi) Non interference/Neutrality – the system should have minimal adverse effect on labour, entrepreneurship, demand, supply savings, investment etc.
(vii) Simplicity – Tax laws should be simple and easy to understand
(viii) Political acceptability – The tax system should not create unrest among the populace.
(ix) Buoyancy/Elasticity of tax system – As the tax increases, the yield must also increase.
(x) Adequacy – The tax system should be able to provide for the needed revenue by the government to carry out its various functions.
