Question

Explain any five characteristics of the tax.

State two characteristics of tax.

Answer 1

1. Compulsory payment: A tax is a compulsory payment to the government by the citizens of a nation. It is imposed only by the government. No one can deny paying tax. Refusal to pay tax is subject to legal action by the government.
2. General welfare: Tax collected by the government is utilised for the common benefit of taxpayers. The government incurs expenditures for the welfare of the nation.
3. No fixed basis of taxation: The state can impose the tax on any basis. Thus, income taxes are imposed on the citizens on the basis of income.
4. Not an exchange relationship: A tax does not involve any exchange relationship. The state imposes taxes in order to cover the expenses of running the government.
5. Establish social justice: The government can also impose high taxes on rich people. This progressive tax policy can reduce the extent of income inequalities within society.
6. Personal Obligation: Another feature of tax is that it creates a personal obligation for the taxpayer. It is the taxpayer's responsibility to pay the taxes he is required to pay. He should not try to hide his income or escape taxes.