How the government has to decide which of the taxes to levy.
General purposes of taxation. - Wealth of Nations (Adam Smith) provides that a good tax system must have the following:

1)      The subjects of every state ought to contribute to and support the government as     near as possible in proportion to their respective abilities i.e. in proportion to revenue they respectively enjoy under the protection of that state.

2)      The tax which each individual is bound to pay ought to be certain and not arbitral

3)      Each tax ought to be levied at the time in the manner it is most likely to be convenient for contributors to pay it.

4)      Every tax ought to be so contrived as both to take out of and take out of the pockets of the people as little as possible over and above that which it brings to the public treasury of the state.  


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