Internal Accounting Control Essay

5090 Words Nov 23rd, 2013 21 Pages
Asia-Pacific Development Journal

Vol. 8, No. 1, June 2001

Azizul Islam*

This paper seeks to describe the principles that have guided recent tax reforms in Asian developing countries. It critically examines the purported rationale underlying these reforms and raises some issues connected with these reforms. The paper first discusses the new direction of the perceived role of taxation as a macroeconomic tool and the principles which have formed the basis of recent tax reforms. It then analyses the implications of the application of these principles for the level and structure of taxes. It concludes with a summary of the key issues raised in the paper.

Developing countries implemented an array of major
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In the past, tax systems were used in developing countries to serve multiple objectives. These included, in
* Former Chief of the Development Research and Policy Analysis Division, ESCAP. The views expressed are those of the author and do not necessarily reflect those of the United Nations.


Asia-Pacific Development Journal

Vol. 8, No. 1, June 2001

addition to mobilization of resources to finance government expenditure, promoting savings and investment; inducing savings in particular forms to facilitate the process of channelling savings into investment; directing investment into desirable activities; encouraging the use of labour-intensive production techniques; bringing about greater equity in the distribution of income; and correcting externalities. Taxation was viewed as a powerful policy instrument to serve “the dual role of securing resource transfers to the public sector for application to planned uses and inducing the private sector to operate in conformity with plan objectives” (ESCAP, 1983, p. 405). There appears to have been a fundamental shift in the perception of the role of taxation during the last two decades. The view that has gained wide acceptance in both academic circles and international institutions is that the tax system should be assigned a much narrower role; it should focus on raising revenue. To illustrate, Burgess and Stern (1992, p. 1) write that the

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