Why taxes are needed and why it is necessary to pay taxes.

Taxes are the biggest "pain" for many citizens of the country, including Ukraine. However, the tax system works and quite successfully if one understands why taxes are needed and why citizens themselves should be interested in paying them. 

Delving into why one should pay taxes, it is worth looking a bit deeper into the topic of how the economy of the country works. Then it will be clearer why to pay taxes and what benefit they bring. 

Why are taxes needed and is it worth paying them? 

All adult citizens of the country with a stable income must pay taxes according to the law. These are mandatory payments collected by the state from citizens, organizations, and enterprises to finance its activities. Citizens working in any companies pay taxes, just as entrepreneurs or self-employed individuals do. Only the size of the taxes may differ. As for the question of whether to pay taxes, in terms of legislation, a citizen has little choice. If they receive a salary or profit, they must pay tax. 

Why is it necessary to pay: taxes play a key role in supporting government programs and services, such as education, healthcare, infrastructure, defense, and social payments. In other words, all this will later be "free" in terms of legislation. 

To understand how this system works, one should also comprehend the main functions of taxes:

1. Taxes are the primary source of revenue for the state, allowing for the financing of public services and programs.

2. Through the tax system, the state redistributes income, supporting social programs, aiding those in need, and promoting economic equality.

3. Taxes are used to regulate the economy, including stimulating or restraining certain types of activities (for instance, environmental pollution taxes).

4. Taxes also serve as a tool for controlling and accounting for the incomes of individuals and legal entities.

All these functions are equally important for the economy of the state. 

Types of Taxes 

Considering that everyone has different earnings, taxes cannot be the same either. In Ukraine, there are several types of taxes. The most popular among them are the so-called direct taxes. These include personal income tax (for individuals) and corporate tax (on company profits). Property tax can also be included here. 

There are also so-called indirect taxes in Ukraine. These include VAT and excise duties. Customs duties can also be added here. 

Overall, the tax system is quite simple. The state assesses the situation and sets taxes (the law defines the limits, as well as rates and payment procedures). After that, the procedure for collecting taxes is established. Taxes are collected by state authorities (tax services), which monitor the accuracy of the calculation and the timeliness of tax payments. 

In turn, taxpayers (individuals, companies) are required to provide tax reporting, indicating their incomes, expenses, and the amount of tax to be paid. This is a mandatory condition for all working citizens. All paid taxes go to the budget (there are established deadlines). 

A few words should be said immediately about audits. Tax authorities check the accuracy of tax payments and can conduct tax audits. Penalties and other sanctions are imposed for tax evasion. Thus, a citizen cannot choose whether to pay tax or not. 

As for where taxes go, the collected funds are directed to the state budget and used to finance government needs, such as infrastructure, education, healthcare, social programs, and others.

Importance of Taxes 

It is hard to argue that taxes have become a heavy burden for many, as they can grow while earnings may remain the same. However, taxes have an important regulatory function. Taxes ensure the funding of public goods and services that would otherwise be unavailable or extremely expensive for most people.

Through taxes, the state also redistributes resources, supporting those in need and ensuring equal access to basic services. Additionally, taxes help regulate economic activity and ensure stable economic development.

Therefore, even if there were a choice to pay taxes or not, citizens of the country would have to look for another mechanism for social justice. However, the tax system in most countries is not very favorable. Due to it, even in Ukraine, small businesses often close. During the war, Ukraine can become an example of how rising taxes become unbearable for citizens who are already living in incredibly difficult conditions.