Tax Relief; A Perk or A Necessity?

Tax is the obligation we pay to live in the civilized world. The system has established over centuries and every country has its own tax system now which may vary from country to country depending on the social and economic condition of the country.  However, the system sometimes allows the taxpayers with exemptions or reliefs if they fall in a certain category or class.  Tax relief is essentially the relaxation, removal or reduction of the liable tax payment that would otherwise be payable as a civic duty. The relief or otherwise called exemption can either be waved off completely or partially based on the rules established. The relief is usually allowed to promote a particular community of the sector or product to save the beneficiary from either to default or to grow. Certain medical products may get exemption from the tax to make sure its availability or an under performing sector may enjoy an exemption for a particular time period to get itself established.

The tax exemption can also be used as a tool to encourage a particular behavior or to increase spending in a specific category. For example, the charity paid or the donation made to a charitable organization which is regulated and registered may get relief from the amount payable as tax.

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There are many approaches that are adapted by the tax authorities. The exemption basically is the exception to an established rule and should not be considered as the non-existence of the rule or liability. One may argue that the reduction in the payable tax or exemption is the perk which is designed to provide unjustified benefit to the beneficiary but we have to keep in mind that the tax system, in its very nature, is a tool to establish an enabling environment for the economy. If the tax relief is not offered to anyone who may need it, then it will destroy the very fabric of the system. In the nutshell a tax system is designed for organizations, businesses and individuals to contribute for the betterment of the system by paying a predefined portion of their income they earn within the system. But sometimes the businesses or individuals need to be on the receiving end to keep contributing to the system otherwise the system will struggle to run. The tax relief is simply a tool to achieve the balance in the economic system.

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