Platino, Grace Anne P.

Activity 2 Critical Essay

Discuss the significance of taxes in nation-building.

Taxes provide revenue for the government to fund public services and investments that contribute to
nation-building. According to the Department of Finance, Republic of the Philippines, taxes are
mandatory contributions of everyone to raise revenue for nation-building. The revenue is used to pay for
our doctors, teachers, soldiers, and other government personnel and official as, as well as for building
schools, hospitals, roads, and other infrastructures. Taxes also allow the government to redistribute
wealth to an extent and contribute to social welfare programs that aim to lift people out of poverty and
enhance equality of opportunity. A functioning tax system and high degree of tax compliance help
establish government legitimacy and authority as well. Effective use of tax revenue for nation-building
purposes promotes economic development and citizens trust and willingness to pay taxes, creating a
virtuous cycle. Taxes are thus vital for generating the state capacity and social contract needed for
nation-building.