What is Tax?
Tax is enforcing a financial charge or other levy upon an individual or legal entity by the government, failure to pay is punishable by law. Taxes are also imposed by many administrative divisions. Taxes can be direct tax or indirect tax, and may be paid in money or labour equivalents. A tax may be defined as a monetary burden placed upon individuals or property owners to support the government and the payment demanded by legislative authority on a regular basis. A tax is not a voluntary payment or donation, it is a compulsory contribution.
Money provided by taxation is used by states and their functional equivalents. Some of these include expenditures on war, the enforcement of law and public order, protection of property, economic infrastructure (roads, legal tender, enforcement of contracts, etc.), public works, social engineering, and the operation of government itself. Governments also use taxes to fund welfare and public services. A portion of taxes also go to pay off the state’s debt and the interest this debt accrues. These services can include education systems, health care systems, and pensions for the elderly, unemployment benefits, and public transportation. Energy, water and waste management systems.
Governments use different kinds of taxes and vary the tax rates. This is done to dispense the tax burden among individuals according to their earnings. Historically, the tax system was supported to the poor , in ways of social security systems, disabled support system and retires. In addition, taxes are applied to fund foreign aid and military ventures, to influence the macroeconomic performance of the economy (the government’s strategy for doing this is called its fiscal policy), or to modify patterns of consumption or employment within an economy, by making some classes of transaction more or less attractive.
A nation’s tax system is often a reflection of its mutual values and the values of those in power. To create a system of taxation, a nation must make choices regarding the distribution of the tax burden who will pay taxes and how much they will pay—and how the taxes collected will be spent. In democratic nations where the public elects those in charge of establishing the tax system, these choices reflect the type of community that the public wishes to create. In countries where the public does not have a significant amount of influence over the system of taxation, that system may be more of a reflection on the values of those in power.
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