TAXATION

CONTENT

1. Definition of Tax
2. Uses of/Reasons for/Importance of Taxation
3. Systems of Tax
4. Types/Classification of Tax
5. Calculations on Revenue, Expenditure and Tax

Definition of Tax

Tax is a compulsory levy imposed by the government, paid on income and gains occurring to individuals and organization as well as production and consumption of goods and services, and disposal of properties for the common good of all

It is the compulsory payment made by individuals and organizations to the government in order to meet her expenditure.

Uses of/Reasons for/Importance of Taxation

Taxes are collected for the following reasons:

1. Revenue Generation: The main purpose of imposing taxes is to generate revenue for financing government activities.
2. Discourage consumption of certain goods: Certain goods like tobacco, alcohol are considered harmful to the health of the people, hence government impose heavy tax on them.
3. Control and stabilize the economy: Taxes are imposed to control and stabilize the economy especially during inflation and recession. During inflation, taxes are raised to reduce the disposable income and reduce taxes to increase disposable income during economy down-turn.