Answer to Question #149286 in Economics of Enterprise for Pearl

Question

What are the positive contributions of the firm in paying the correct amount
of taxes due to the government?

Answer 1

To foster economic growth and development government needs sustainable sources of funding for social programs and public investments which requires government to raise revenue. Taxes pays for public goods and services. Paying the correct amount of tax provides good credit rating to financial institutions and government agencies. The higher the tax firm declare, the higher the credit rating. Firm can use their good credit rating when getting a loan for additional funds for the expansion of their business or other purposes which in turn will lead to increased government revenue through taxes.