By canons of taxation we simply mean the characteristics or qualities which a good tax system should possess. In fact, canons of taxation are related to the administrative part of a tax. Adam Smith first devised the principles or canons of taxation in 1776.
Adam Smith’s Four Canons of Taxation remain a gold standard for evaluating any Government fiscal system. They represent not only economic logic but moral reasoning: that government should raise money fairly, predictably, conveniently, and efficiently.
In his book The Wealth of Nations, Adam Smith presented four canons of taxation: (1) equity, (2) certainty, (3) convenience, and (4) economy.
Other canons of taxation apart from Adam Smith’s canons are canon of simplicity, canon of productivity, canon of flexibility and canon of diversity. These canons are given by Charles F. Bastable.
Over time, these principles have been expanded and refined by other economists, but the core ideas remain relevant even today. This article aims to explain the canons of taxation, highlighting their importance and application in modern tax systems.
Among 9 canons of taxation discussed, Adam Smith propounded the following first four canons of taxatio n – (1) Canon of Equity. It implies that tax should be Levied on citizens on the basis of equality. The sacrifice of all citizens must be equal.
Adam Smith has given the following four canons of taxation. 1) Canon of Equality 2) Canon of Economy 3) Canon of Certainty and 4) Canon of Convenience. Canon of equity or equality is the most important and basic Canon of taxation. It is based on the principle of social justice and ability to pay.