Can govrnment function without collecting Tax?

Question

I would like to know if government can run without collecting income tax like in Middle East

I am not good at understanding high level details of tax, but from a lay man point of view I know that middle east countries harness their natural resources(like oil etc) which is used for running the government

Answer 1

A government needs funds to run its operations like managing a country - mainly salaries of the various departments, offices, defence, infrastructure in country and its maintenance. Please note - This answer is in general and not specific to a country.
High income tax rates can be avoided if
(i) the country has a good natural resources and proper plans by government and industries to harness the same
(ii) if government collects properly and people pay other indirect taxes like sales tax, (whatever name & mode it is), etc.
(iii) if there is no corruption
(iv) if all the revenue is enough to run to run the functions
then a government need not seek to impose high income tax rates.
Moreover lesser income tax could be an incentive to the industries for their development which in turn help develop the country due the overall improvement in economy, like e.g. the buying power increases which in turn increases demand and market for products, which in turn is incentive to manufacturing industries and so on. This would have a cyclic effect and help improve the entire country.

Answer 2

Andy (second answer) is forgetting that Customs and Duties ARE taxes. To address your question, all governments require money to operate. If Middle Eastern governments operate without taxes, they are obtaining funds though government ownership of the oil industry. Because this question was posted under Taxes -> United States, I will point out that the US government does not own and operate businesses for profit.

Answer 3

Yes but not effectively, it would almost be like anarchy, without money, a government has little power. And it would have no military, just a large militia, that would be poorly trained and equipped. Not a good situation. Also no firemen, police, roads, 911, nothing. It would be hell practically, back to the dark ages, like North Korea except poorer and with even less organization, think about that... Who cares if you get too keep a couple thousand bucks if you get robbed like crazy by criminals because there is no prison, because that was funded by taxes too. Think of the wild west, but with automatic weapons. yeah....

Answer 4

Not likely but again YOU must explain to everyone how the countries in the Middle East function without an income tax.

EACH country is different so your question is really open-ended and not a fair one.

Answer 5

NO. AND IT SHOULD NOT, TAXEX ARE NECESSARY FOR FOLLOWING REASONS:
1) control Buying power of people, limits inflation
2) Encourage people to save
3) Government is able to collect money from people in the form of tax or the savings people make to save tax. This increases money flow in market, which is necessary for development
4)Last but not the least Taxes are used for development of a country.

Answer 6

Yes, The Government can run without taxing salaried class who are the only victims for being honest in thier earnings...How many cases against countable big Businees class are resoved on Tax evasions in recent times in the court?...Becoz of these delays the losses in tax revenues runs into crores of rupees ...It is all politically linked and no one want to think or act about it.The Govt is run by Big Biz Tycoons(BBT)..Do U know the price of even a Egg,Milk powder,Candoms,match box ,.etc.,. in this country is fixed at the whims and fancies of BBTs.So if every responsible citizen of India acts with unity to curb the tax evasion by BBTs , there is no need to shell out hard earned money towards taxes by majority of service class community in India for the years to come at the cost of corrupt and politically motivated decisions.Did U get the point ?Let us think and act on it seriously

Answer 7

The US Government (and many foreign ones) survived a long time on just the receipts from customs duties.

That wouldn't work today. But some governments -- like Zimbabwe, or Weimar Germany -- survive largely on depreciation of the currency. That may be where America is headed if its deficits escalate and it continues to borrow and borrow from China and other foreign countries.

A few Middle Eastern countries, and the US state of Alaska and the Canadian province of Alberta, have enough earnings from petroleum (or nearly enough) to cover their governmental expenses.

Answer 8

and end of the oil well they will collect tax