Which principle of taxation requires a reasonable relationship between the tax imposed and the benefits conferred?

The principle of taxation that establishes a reasonable relationship between the tax imposed and the benefits conferred is known as just taxation. This concept is rooted in the idea that individuals should contribute to government revenue in proportion to the benefits they receive from public services and infrastructure. For taxation to be deemed "just," there should be a fair balance, meaning that taxpayers receive adequate value for what they pay.

This principle supports the notion of fairness in the tax system. For example, if a community invests in public roads or schools, the residents should feel that their tax contributions are justified by the improvements that directly affect them. This relationship encourages compliance and promotes the legitimacy of the tax structure.

In contrast, other principles listed do not specifically focus on the relationship between tax and benefits. Equity emphasizes fairness and impartiality in taxation, while direct taxation refers to taxes that are levied directly on personal or corporate income. Value-added taxation is a consumption tax placed on a product whenever value is added at each stage of production or distribution. These principles address different aspects of the taxation system rather than the direct connection between tax paid and benefits received.