Types of Taxes

Tax

A tax is a payment made to the government by an individual who has earned certain amount during a year. Income tax is a most important basis of income to the government. In other words it is an amount charged by a government on products, income, or activities. There are two types of taxes direct tax (which is charged on personal and corporate income directly) and indirect tax (which is charged on the prices of services and goods) (Alm , 1992).

Taxation

Taxation is a set of rules as in when it should be paid, who pays the tax to whom and how much is the tax to be paid. Taxation is a process or means by which the ruler increases income to settle the required expenses of government, through its law-making body. Defined in another way, it is a method of allocating the expenses of government among those who are privileged to have the benefit of its facilities and must, therefore, bear its load

Types of Taxes

Progressive Tax: implies that, as you grow the economic capacity of the taxpayers, the percentage increases required in the State collection. Examples include taxes on gains.

Regressive Tax: implies that, as a growing economic capacity of the taxpayers, reduces the percentage required by the State collection. Examples include taxes on Gases, Cigarettes.

Proportional Tax: implies that, as a growing economic capacity of the taxpayers, the percentage that the State requires in collecting taxes remains. Examples include VAT, personal property taxes etc.

Progressive Tax

A progressive tax is a tax whose rate increases with the value of the item taxed, called tax base or tax base. In other words, the higher the value of the item that is subject to tax, the greater the rate applied to this value to calculate the tax will be important. For ...