Taxation

TAXATION is the act of laying a tax i.e., the process or means by which the sovereign, through its law-making body, raises income to defray the necessary expenses of the government.

As a power, taxation refers to the inherent power of the state to demand enforced contributions for public purpose or purposes.

Purpose of Taxation

The primary purpose of taxation on the part of the government is to provide funds or property with which to promote the general welfare and protection of its citizens.

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

Essential characteristics of tax

1. It is an enforced contribution – A tax is not a voluntary payment or donation and its imposition is in no way dependent upon the will or assent, open or implied of the person taxed.

2. It is generally payable in money – unless qualified by law, the term “taxes” or “tax” is usually understood to be a pecuniary burden – an exaction to be discharged alone in the form of money which must be in legal tender.

3. It is proportionate in character – a tax is laid by some rule of apportionment according to which persons share the public burden. It is ordinarily based on ability to pay. Thus, in practice, some people pay very high taxes; others, very small amounts or none at all.

4. It is levied on persons or property – a tax may also be imposed on acts, transactions, rights or privileges. In each case, however, it is only a person who pays the tax. The property is resorted to for the purpose of ascertaining the amount of tax that must be paid and of enforcing payment in case of default of the taxpayer. But not all who pay a tax shoulder the burden of the tax.

5. It is levied by the state which has jurisdiction over the person or property - the object to be taxed must be subject to the jurisdiction of the...