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<p align="justify">An obligation on people and businesses of a country by the government is called taxation. Since ancient times, governments have been collecting revenues form their population in different forms. It was necessary in order to meet the different expenditures which the governments had to incur.&#160; </p>
<p align="justify">The nature and the extent of expenditures incurred by the governments have undergone a lot of changes in the modern world. New sources of collecting the necessary amounts have also been found. For Example, now a state has to spend a lot of money on its defense requirements. Development expenditures and expenditures on general public services have also increased manifold. New sources of receiving the necessary amounts have also emerged. For Example, now a country can receive some resources form another country or an international organization either as loans or as aids. However, collecting the amounts form its own population still remains as a major and popular source. </p>
<p align="justify">[linkunit]Every country tries to develop its internal resources, because different types of problems are associated with the amounts received from external sources. A government tries to generate internal revenue from different sources. The stability of any state and its economic structure is strongly correlated with the shape and framework of its taxation system.&#160; Whenever there is a discussion of cannon of taxation the principles described in the Adam Smith’s book “Wealth and Nations” will be discussed. These canons are still providing foundation for taxation principles.&#160; </p>
<h3 align="justify">Canon of Equality</h3>
<p align="justify">This canon discussed the equality and justice for taxation principles. This is about the proportion of the right and obligation and the justified share of the taxes accordingly. This rule advocates the progressive taxation theory with different tax rate slabs for different income people where rich and high earning people have to share their excessive earnings with society. </p>
<h3 align="justify">Cannon of Certainly</h3>
<p align="justify">The tax rules should be clear and logical and define briefly in easy way for general understanding. This cannon has a vital effect on taxpayers as if they not certain, and hazy about the system they will hesitate to step in the process. This cannon is works for both taxpayer and state. </p>
<p align="justify">Adam Smith says “The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of the payment, the manner of payment, the quantity to be paid ought all to be clear and plain to the contributor and to every other person. Where it is otherwise, every person subject to tax is put more or less, in the power of tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by terror of each aggravation, some present or perquisite himself.” </p>
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<h3 align="justify">Cannon of Convenience</h3>
<p align="justify">As appeared from its name, the process and system should be convenient for the tax payer and state at the same time.&#160; <br />Cannon of Simplicity: The tax system should be simple and flexible. It should not be rigid. It can be mix of direct and indirect tax.
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