Looking back to the ancient past, we can see that there was no civilization that somehow did not collect taxes. Introduction of taxes is related to the wartime i.e. covering war costs. At the beginning of the XX. century attention had been focused on fairnees of taxation and bounty of tax system. The state is obligated to perform certain tasks and measures based on the Constitution, laws and other regulations and for that it needs certain revenues. Government revenues are resources used by state to cover expenses in it’s jurisdiction. Taxes are the most important source of revenue for every state. As well as taxes are used to finance expenditures i.e. achieving of fiscal goals, they can also affect price stability, income distribtion and higher employment. The goal of this paper is to cover the principles of taxation and their role, given that a good tax system is based on the principle of effciency and equity. Principle is fundamental rule i.e. leading idea that exists in the legislature. The distribution of the tax burden must be fair and the state should apply taxation with low cost to taxpayers. Legal sources for taxpayers and state administration bodies are the Constitution of the Republic of Croatia, the General Tax Law, the Law on General Administrative Procedure and other laws governing the system. Also, through the paper we analyze the connection between the principles of taxation and administrative procedure.