Features Or Elements Of A Tax
Prof. Adams has given a comprehensive definition of Tax, covering its different aspects, as follows:
"From the stand point of view of the State, a tax is a source of derivative revenue; from the angle of the citizen, a tax is a coerced payment; from the administrative point of view, it is demand for money by state in conformity to established rules, from the point of view of theory, a Tax is a contribution from individuals for common expenditure"
Features or Characteristics or Elements of tax:
- Tax is a legal collection: A tax has “statutory sanction”. It cannot be imposed arbitrarily. Certain legal requirements are to be followed in imposing a tax.
- Tax is a personal obligation: A tax is a personal obligation and it creates a personal responsibility on the taxpayers. No citizen should think of evading tax. Every citizen should pay his taxes.
- Tax is a compulsory contribution: It is a compulsory contribution to the State by citizens, which may be paid willingly. State has the right to tax citizens. Nobody can refuse to pay taxes claiming that he does not derive any benefit from payment of tax. Refusal to pay tax is a punishable offence.
- Element of Sacrifice: In the payment of taxes, an element of sacrifice is involved because they are paid for the general interest of the community.
- Tax is imposed by Government alone: Government alone has the authority to levy taxes. Even if the management of a Temple or Trust makes it compulsory for every devotee or family to pay a specific amount, it cannot be termed as tax
- Revenue collection: The power of taxation is used to raise sufficient revenues for the state, apart from achieving other collateral objectives.
- Socio-economic objectives: Modern governments use tax as an instrument to achieve structural changes and also realizing socio-economic objectives.
- Tax is a contribution for the common benefit of the society: It is levied for the common good of the society without any regard to benefit to particular individuals. Tax is intended to use the proceeds for the benefit of the community, to render public services etc., and not intended for benefiting any one or a group of individuals.
- Benefit is not a condition for tax payment: The tax payer is not promised any specific benefit. Taxes are paid because they are compulsory and the proceeds used for common good. Benefit derived by a tax payer may not be proportionate to the tax paid.
- Tax is not imposed to realize cost of benefit: Tax is not a realization of cost of services or benefit. A poor person may be benefited most by way of public expenditure without payment of any tax.
- Taxes may be assessed on capital or income but they are paid out of income.
- A tax may be imposed on a commodity or property or individual. But tax is actually paid by individuals.
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