Concept, Nature and Characteristics of Taxation and Taxes - Public Finance | Public Finance - B Com PDF Download

Concept, Nature and Characteristics of Taxation and Taxes.

Meaning of Taxation

Taxation is the inherent power of the state, acting through the legislature, to impose and collect revenues to support the government and its recognized objects. Simply stated, taxation is the power of the State to collect revenues for public purpose.

Purpose of Taxation

Primary Purpose - is to provide funds or property with which the government discharges its appropriate functions for the protection and general welfare of the its citizens.

Non Revenue Objectives

Aside from purely financing government operational expenditures, taxation is also utilized as a tool to carry out the national objective of social and economic development.

1. to strengthen anemic enterprises by granting them tax exemptions or other conditions or incentives for growth;
2. to protect local industries against foreign competition by increasing local import taxes;
3. as a bargaining tool in trade negotiations with other countries;
4. to counter the effects of inflation or depression;
5. to reduce inequalities in the distribution of wealth;
6. to promote science and invention, finance educational activities or maintain and improve the efficiency of local police forces;
7. to implement police power and promote general welfare.

Meaning of Taxes

Taxes are enforced proportional contributions from persons and property levied by the lawmaking body of the state by virtue of its sovereignty for the support of the government and all public needs.

Tax in a general sense, is any contribution imposed by the government upon individuals for the use and service of the state, whether under the name of toll, tribute, impost, duty, custom, excise, subsidy, aid, supply or other name. Tax, in its essential characteristics , is not a debt.

Essential characteristics of tax.

1. it is an enforced contribution
2. it is generally payable in money.
3. It is proportionate in character, usually based on the ability to pay
4. it is levied on persons and property within the jurisdiction of the state
5. it is levied pursuant to legislative authority, the power to tax can only be exercised by the law making body or congress
6. it is levied for public purpose
7. it is commonly required to be paid a regular intervals.