Income tax is a percentual charge on the earning or income of every individual or businesses. Most income taxes are automatically deducted upon receiving the salary or during the time of service. However, some taxes are being paid after one fiscal year which is composed of 12 months. Income tax is basically considered as a bill charged on income, salaries or profits by the state government. The percentage deducted on salaries for income tax primarily depends on the amount of income being earned. This is the reason why income tax is usually referred to as progressive tax since it is directly proportional to the rise and fall of one’s profits. But why do we have to pay income tax? Below are the two main reasons why we need to pay such levy.
- For government funding – income tax is being charged by the government in order to get their funding for the national budget. This budget is used in order to implement various projects and programs that will help improve the status of the country. This is why the government is able to finance the construction of bridges, buildings, hospitals, schools, colleges and other public utilities and structures. This budget is also allocated in different areas of programs including the salaries for government employees and officials. Without taxation, none of these government programs is possible. This is one of the reasons why we need to pay our income tax.
- Citizen obligation – As citizens of a country or a state, we are certainly obliged to pay income taxes. This is one way for us to promote and support the government’s programs and projects which are always for the benefit of the public. The collected money or tax is also used in emergency scenarios such as disasters and calamities wherein food and safety supplies are needed.
These are primarily the reasons why do we have to pay income tax. It is through this kind of taxation wherein we could have enough funds to cover the different necessities of the public. Failure to pay income taxes usually results to different consequences and penalties. This includes paying penalty fees or even imprisonment. The punishment varies depending on the gravity of the situation as well as on the amount of tax left unpaid. All in all, income tax is undeniably necessary for the escalation of our nation towards improvement.