Introduction to Taxation

Introduction To Taxation 

 ★Definition of Taxation :                                     

The term 'tax' has been derived from the French word 'taxe' and etymologically,the Latin word 'taxare' is related to the term 'tax',which means 'to charge'.

"Tax' means the income tax payable under the ordinance and includes any additional tax,excess profit tax,penalty, interest, fees or other charges leviable or payable under this ordinance "_ section 2(26) of the ITO 1984.

"A tax  is purely and simply a contribution, whether direct or masked which the public authorities impTose upon the inhabitants or goods for the purpose of defraying government expenditures."_Leroy Beaulieu.

"Taxes are compulsory payment to government without expectation of direct return in benefit to the tax payer."_P.E.Taylor.

★ Characteristics of Tax:

1.Tax is a payment to the government by the people as it is levied by the government as per the  section 83 of the constitution of Bangladesh.

2.payment of taxes is non penal and compulsory; hence refusal to pay a tax is a punishable offence.

3.An element of sacrifice is there in the payment of tax as they pay the taxes in order to ensure public interest.

4.The aim of tax collection is to finance the government expenditure to ensure public interest and welfare.

5.Tax is not the cost of the benefit conferred by the government on the public. The  benefit received from the country is not directly the return of tax.

6.It is one of the prime sources of revenue for the government.

7.Tax is not any fine or penalty.

8.Tax can only be imposed by the government of a country.



           
         

   


★purposes or Objectives of Taxation :

1.Revenue collection :Tax is a major source of revenue for the government. In the Bangladesh tax revenue accounts for nearly 80 percent ot the total government revenue.

2.Reduction of inequalities in income and wealth :One of the main objectives of taxation is to reduce inequalities in income and wealth. This is possible by taxing rich people heavily and to the poorer section through progressive income tax, wealth tax,expenditure tax etc.

3. Accelerating economic growth  :In order to ensure the economic growth, the tax system must be so designed as to rise the rates of savings and। investments.This savings may be invested in productive sectors of the county.

4. Control of consumption  :The government not only raises revenue through taxation but it also imposes restriction on the use of certain goods and services in a way desirable and respectable for a healthy state of the  society. Taxes on intoxicant,tobacco etc.

5. Protection of local industries :In order to protect the local industries from the uneven competition government  may provide tax incentives for poor local industries and so,should design the tax policy to ensure the protection of poor local industries.

6. Economic Development  :The tax revenue can be used by the government to ensure the economic development of the country. It can be used to build the infrastructure, to invest in social security programs, in various property elevation programs. Government can invest in productive sectors and can reduce unemployment.