How tax spending affects the state of the nation

When we pay tax, we’re effectively paying the government a fee so that they can take good care of us. The tax system is like a circle of trust. We trust the government not to exploit us but to charge us fair rates in exchange for essential services. The government trusts us to pay what they deem necessary and not to shirk their civic responsibilities. Problems arise when the public starts to believe that the government no longer has it’s best interests at heart and is spending money on things other than service delivery.

This can be particularly problematic in developing countries where many people live in relative deprivation and don’t earn enough to pay even basic tax rates. In terms of service delivery, however, their needs are the same (or possibly greater) than the percentage of the population who can and do pay their taxes. The taxed find themselves paying for their own services as well as subsidising the poorer communities.

Dissatisfaction develops when they feel that their services suffer because they are stretched to include the impoverished, who are in turn dissatisfied with the perceived inequality of services between their communities and those that are better off. The governments of these countries have the difficult job of trying to balance the needs of the entire population and not be seen to address the needs of a select few.

Our taxes have to pay for police services, health, transport, defence, education, housing, agriculture and industry, as well as social services. And that’s just the tip of the iceberg. Running a country is an expensive occupation, and it’s difficult to judge which services constitute the greater priority. It’s easy to say that educating the youth is the most important task of any country. As the well worn cliché says, the youth are the future. If they aren’t properly educated, then the future is without hope.

But for education to be worth anything, children need proper homes with food, electricity, running water, and good sanitation. They need to be able to live in their communities without fear and they need to be able to get to their schools via reliable transport. Public services cannot be seen in isolation but should be viewed rather as a collective whole.

Governments are judged by how well they care for their citizens, which means that the way that they spend tax money is of paramount importance to their perceived efficiency, both nationally and internationally. The US’s consistent overspending on defence has resulted in a severe loss of confidence in the government’s ability to prioritise. The UK meanwhile spends large amounts on education and pensions. While complete confidence in a government is rare, the UK population at least knows that their government is willing to spend money to safeguard their futures, well into old age. The Zimbabwean government is something else entirely.

We pay taxes so that our governments will take care of all the inconvenient things that are nevertheless essential. We trust them to leave us with enough to take care of the other things, like basic living.

Recommended site:

http://money.uk.msn.com/budget/article.aspx?cp-documentid=4750496

Sandra wrote this article for the online marketers Capital Tax Consulting offshore tax specialists leaders in the field of offshore tax, tax management and tax consulting, they aim to optimise your tax options and make your life simpler at the same time.