Towards the strategic development of the system and philosophy of tax legislation
The use of quality standards in the classification of taxpayer and identification of tax brackets
By: Mustafa Obeid *
Most countries around the world resort to granting exemptions and tax benefits for certain types of commercial, industrial and agricultural activities, according to criteria that vary from country to other dependent on the urgent needs and priorities set by the state in its strategic development plan and the sectors that is most needed to encourage work and investment in. The state may also resort to differentiating between the tax brackets to which individuals who carry out the same activity according to the amount of income or profits earned, by imposing a progressive tax system commensurate with the size of income and achieving relative tax justice among them.
For example, the State may grants tax benefits and exemptions for specific periods in the agricultural sector in general or when planting certain crops that the State wishes to encourage, for example to meet the urgent needs in society, or it may go further more and encourage the cultivation of certain crops in specific seasons when these crops are scarce and grant seasonal tax benefits to meet the needs of society in all circumstances and in the worst environmental and climatic conditions.
In the progressive tax system, the state uses different tax rates that are directly proportional to the amount of net income or profits achieved by the taxpayer, so that the tax rate increases as the amount of this income or profit increases, in order to achieve fairness and balance in the “relative value” of Funds that is collected from all taxpayer of different incomes.
With the increasing burdens and obligations that push on the state, both in developing and even developed countries, resulting from population inflation, and the the geometric growth of successive generations and the corresponding geometric growth of their problems and basic needs, some countries resort to imposing more taxes or even increasing Tax rates in general in the society in order to increase the income allocated to solve these problems and meet the needs of the growing population.
In spite of all efforts made in most countries to develop tax laws and legislations and the introduction of rules and brackets Tax segments that are consistent with the strategic plans of each country and consistent with the priorities of sustainable development and achieving relative justice among individuals on the basis of “Quantitative” difference in the amount of their income, however, none of these countries concerned with the achievement of relative tax justice among individuals on the basis of the “Qualitative” difference in the manner in which such incomes were realized and the nature and quality of the activity undertaken to achieve it.
For example, there is no tax system In the world that differentiates between those who make an income from the falling art industry and those who earn from the good or purposeful art industry, although they are both equal to the prevailing tax systems and are subject to the same tax bracket when income is equal. While the first one contributes to the corruption of successive generations in society and the creation of complex social and ethical problems in it and thus exacerbating the already growing burdens in the society, while the second is trying hard to fix that corruption using good artistic without any result!
The best solution to this socio-economic dilemma is to introduce a new tax bracket system based on “Taxonomic” bases of quality wherever possible, whereby practicing financiers of a given activity are classified according to the prevailing quality standards in this activity and the extent of its positive or negative impact on society, whether it was a commercial. Industrial, agricultural or professional or non-commercial activities. Based on this classification, different tax rates are imposed that are inversely proportional to the nature and quality of such businesses, products or services, activities and professions, and this is the way to achieve relative tax justice among individuals on a “Qualitative” taxonomic basis according to the nature and quality of their activity.
By applying such a system to production plants, for example, it is conceivable that a factory that complies with the instructions of prevention and safety conditions and standards of environmental protection and methods of disposal of waste and product quality can be classified according to industrial quality standards to a higher degree than the classification of another factory that is not complying with these standards, and therefore can accordingly Classified with a tax rate which inversely proportional to the quality of each factory, and therefore the good factory will pay a lower tax than a bad factory, even if the net annual profits of both are in the same tax bracket.
On the one hand, the introduction of a taxonomic system in this way will contribute primarily to the extension of relative tax justice in society on a qualitative basis not only quantitative, and it will contributes to increase the national income of the state so that it can meet the growing needs of the population and solve their worsening problems, and these increase in the income will come from the individuals that exacerbate these problems and not from the other individuals. On the other hand, and this will be the more importantly, this system will contribute to pushing individuals, companies and institutions, to improve the business and raise the efficiency and quality of the products, services and professions that they provide to enter the lower tax segment. And even in that case, the state will not suffer from the scarcity of tax resources to solve problems, because they will inadvertently contribute to alleviating the problems by improving their business and products and thus, they will not cause problems at all.
* Legal and economic researcher, mathematician and computer scientist