Topics: Tax, Indirect tax, Regressive tax Pages: 2 (465 words) Published: March 15, 2013
Different Types of Taxes

The tax payable should be concurrent and equitable as per the ability of an individual or households to pay. This is called the taxable capacity. Tax is the only source of government for revenue generation. Governments finance their all expenses through taxes. Those expenses include,  

To finance defense expense
To finance development work and to carry on social welfare
To finance administrative expenses
Despite that trade driven expenses like budget deficit is also financed through taxes. There are three basic types of taxes. On the basis of those types, further types of taxes are originated. •   A proportional tax is a tax whose burden is the same proportion of income for all households. •  A progressive tax is a tax whose burden, expressed as a percentage of income, increases as income increases. •  A regressive tax is a tax whose burden, expressed as a percentage of income, falls as income increases. Excise taxes (taxes on specific commodities) are regressive. The retail sales tax is also regressive.  

Further there are two types of taxes; Direct Taxes and Indirect Taxes.  
Direct Taxes are levied directly on income, capital value, wealth, corporate assets. Consequently, following are the types of Direct taxes. Income tax, Capital Value tax, Wealth tax, and Corporate Assets tax are Direct taxes. These taxes are directly applied on the capital gain, profit, earnings and salaries of people. Income tax is a kind of progressive tax whereas corporate tax is a kind of proportional tax or applied on flat rate.  

Indirect taxes are charged hidden without the prior information of payee. Mostly these are consumption taxes. Most common indirect taxes are sales tax, central excise tax, and customs. These are called consumption taxes.  

Customs are explained as below
•  These are the duties charged at imports / exports
•  Showing downward trends because of reduction of rates (WTO etc.) •  Protection to local manufacturing...
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