The famous literature on the principles of taxation was embodied in the “Canons of Taxation” by Adams Smith. Since then, economies have adopted (and adapted where necessary) these basic principles for what is considered the most important tool of tax policy. Taxation is a compulsory levy imposed on the income, value of goods and services of individuals, partners and businesses by the authorities. the government. We can say that it is an approach consisting of imposing a tax on the citizen. This imposition should generate revenues which should be used to provide both basic and substantial infrastructure, both social and security, and create conditions for the economic well-being of society as a whole. Aamir et al. (2011) highlight four main objectives of taxation, including:1. Collecting revenue for the government. This will cover administrations, internal and external defense, maintenance of public order as well as social services provided by the government.2. Shifting wealth from high-income earners to low-income earners to reduce inequality.3. Impose duties on harmful products such as tobacco to control their consumption.4. The obligation of government to uphold the public at large when it designs and manages the economy in shaping economic growth and development.ELEMENT OF TAXATIONThe two elements of tax include:I. The tax base can be called the invoiced object. For example, the tax base for income tax is taxable income.II. The tax rate refers to the percentage of the tax base that is paid in tax. This is the tax levied by the government on a taxpayer's income. CLASSIFICATION OF TAX Tax can be classified based on A. INCIDENCE, which are me. Direc...... middle of paper......wealth distribution favors low-income earners.5. Optimal taxes should depend on personal characteristics as well as income: reliance on individual income as the sole source of determining ability to pay taxes is discouraged. Mirrlees (1971) suggests that other characteristics such as IQ, number of degrees, age and color should be used to determine a taxpayer's ability. Other barometers called “Tagging” were proposed by Akerlof (1978) to complement the income-based tax system. This provided more information about individuals, which policymakers can capitalize on when determining tax liability.6. Only final products should be taxed, and generally they should be taxed uniformly:….7. Capital income should not be taxed, at least in anticipation:….8. In a stochastic and dynamic economy, optimal tax policy requires increased sophistication:…..