Definitions [2]
Definitions: Taxes
- According to Prof. Taussig: “The essence of a tax as distinguished from other charges by government is the absence of a direct quid pro quo between the tax payer and the public authority.”
- According to Prof. Seligman: “A tax is a compulsory contribution from the person to the government without reference to special benefits conferred.”
Define tax.
Tax is levied by the government for the development of the state’s economy. The revenue of the government depends on direct and indirect taxes.
Key Points
Key Points: Indirect Tax
- An indirect tax is charged on goods and services, not directly on income.
- It is paid when a product or service is produced, sold or purchased (e.g. GST in India).
- Producers and sellers can shift the burden to consumers through higher prices, so the person who pays it to the government is not the one who finally bears it.
Key Points: Direct Tax
- A direct tax is paid directly on a person’s income or property, and its burden cannot be shifted to someone else (e.g. income tax, wealth tax).
- Proportionate tax: Same fixed rate on all income levels.
- Progressive tax: Tax rate increases as income increases.
- Regressive tax: Rich pay a smaller proportion of their income than the poor.
Concepts [8]
- Public Revenue > Taxes
- Role of Government in Development Policies
- Tax
- Types of Taxes
- How Are Taxes Levied?
- Concept of Black Money
- Tax Evasion
- Taxes and Development
