Taxation as Lifeblood of the Government

A government system is absolutely necessary in every society; without it, the people will be unable to enjoy the benefits of a civilized and orderly society. However, without a system of funding, the government will be unable to exist and provide a wide range of public services to its people; thus, the ultimate basis of taxation is mutual support between the people and the government.

Taxation underpins a state's ability to achieve its objectives; it is one of the primary arenas for the conduct of state-society relations; and it shapes the balance between accumulation and redistribution that gives states their social character. States are limited in their ability to provide security, meet basic needs, and foster economic development if they lack the ability to effectively raise revenues. However, the political importance of taxation extends beyond revenue generation. The creation of a social contract based on tax negotiating and the institutional-building impetus provided by the revenue imperative are two ways to look at the role of taxation in state formation. Progress in the first area has the potential to foster representative democracy while the second area aids to build state capacity. Both have the potential to strengthen the state's legitimacy and increase accountability between the state and its citizens.

Taking things into