Definition And Evaluation Of Tax

Tax is fee that is charged by government which is on income, activity or product. Tax when directly levied on corporate or personal incomes then we call it as direct-tax. Taxes when levied upon cost of service or good then we call it as indirect-tax. Taxation’s purpose is financing the expenditures of government. Taxes very significant use is financing public services and goods, like cleaning of street and lighting of street. As public services and goods don’t permit exclusion of non-payer, or permit exclusion through consumer, so there can’t be mart in service or goods, and therefore government provide them, which incline for financing themselves mostly through the taxes.

Standards for Evaluation of Tax:

• Simplicity – Tax-law must be in such a way that its rules are understood by the tax payers easily.
• Fairness – Taxpayers who are situated similarly must be similarly taxed.
• Economic efficiency and growth – System of tax must not reduce or impede economies productive efficiency.
• Neutrality – Tax-law’s effect on decision’s of taxpayer of how a specific transaction be carried must be minimum.
• Transparency – It should be known by a taxpayer that when and how tax is being imposed upon him.
• Reducing noncompliance – Tax must be formed or structured in such a way to reduce noncompliance.
• Collection being cost effective – Tax collected by taxpayer and government must be very less.
• Certainty – Rules of must include when, how and how much one has to pay tax.

Structures And Tax Rate:

Questions:

• Define Tax.
• Explain standards for evaluation a Tax.
• State Tax rates and structures.