The tax mix obtained by Abijanville city does not show any form of tax equity. As compared to Comparator, it has a high taxation rate on personal income. It imposes a very low-income rate on corporate investors. However, the movie is favorable to corporate investments as the city fails to transfer purchase power from private individuals to the public. In addition, the city fails to meet the needed aspects of tax equity since lower taxes on sale will affect a city’s capability to export to the neighboring city.
For Abijanville to regain its command in the intercity market, it should reduce taxes on personal income so as to shift purchase power from the corporate, private world to the public. In order to gain the intended income for its budget, it should considerably increase corporate income taxes as well as sales taxes to help them gain from goods that are imported from the neighboring city. In addition, it should create incentives for investment companies in order to cushion them from undue competition from foreign companies. Instead of depending solely on personal income tax, the city government should get its income from other subjects of taxation.
In order to conduct a comprehensive analysis of Abijanville city’s tax mix, it is important to know if there are some taxation exemptions of local industries and business investments. In addition, I would wish to know if the income tax system follows the horizontal or vertical aspect of tax equity. In addition, it would be important to establish policies that are set out to cushion consumers from unhealthy exploitation by private sectors in terms of salary ranges, bearing in mind the high rates of taxation. In addition, it would be important to establish exemption policies and relevant taxation rules.