Tax & Taxation
The term 'tax' has been derived from the French word taxe and etymologically, the Latin word taxare is related to the term 'tax', which means 'to charge'. Tax is an obligatory payment in the part of the citizen without the expectation of any direct benefit. Taxation is the obligation of non-penal, yet compulsory transfer of resources from the private to the public sector levied on a basis of predetermined criteria and without reference to specific benefit received. It is one of the major sources of public revenue. There are basically two types of taxes, one is direct and another is indirect tax. Direct tax is a sort of tax the impact /incidents fall back on the person on whom it is imposed. Indirect taxes are those burden of which can be passed on others through price vehicles.
The Four "R"s
Taxation has four main purposes or effects: Revenue, Redistribution, Repricing, and Representation. 1.
The main purpose is revenue: taxes raise money to spend on armies, roads, schools and hospitals, and on more indirect government functions like market regulation or legal systems. 2.
A second is redistribution. Normally, this means transferring wealth from the richer sections of society to poorer sections. 3.
A third purpose of taxation is repricing. Taxes are levied to address externalities; for example, tobacco is taxed to discourage smoking, and a carbon tax discourages use of carbon-based fuels. 4.
A fourth, consequential effect of taxation in its historical setting has been representation.[ ][ ]
A tax base is comprised of or refers to the assessed value of a set of assets, or the income stream generated by assets or investments. In another way, a pool of taxable assets or investments represents a tax base. All the houses in a town or city, and any other taxable real estate, collectively form that municipality's property tax base. All the residents, businesses, and taxable assets in a state comprise the state's tax base, as do all...
Please join StudyMode to read the full document