How can we explain the term “TAX” and what are the types:
A Tax is a financial charge imposed upon a taxpayer it may be an individual or legal entity by a state or the functional equivalent of a state.In case of not paying, it is punishable by law.Tax are of two types direct tax or indirect tax and it may be paid in money or as its labour equalent. There are different kinds of tax and Government vary the tax rates.
Kinds of Taxes :
1. Income Tax : An income tax is a Government tax imposed on individuals or taxpayers. It depends or varies according to the income or profits of the taxpayer.If taxpayers not paying tax owed on time leads to significant penalities, which may cause jail also for individuals or revocation of an entity’s legal existence.
2. Negative Income Tax : It is a tax system in which people earning below a certain amount receive supplemental pay from the Government instead of paying taxes to the Government.But the system not implemented yet.
3.Capital gains tax: These are the kind of tax imposed on capital gains.These taxes are not implemented by all countries and most have different rates of taxation.
4.Corporate Tax: These taxes may also reffered to as income tax or capital tax and most of the countries impose corporate tax also called company tax.Corporate tax impose on the income or capital of some types of legal entities.
5. Taxes on property: Property tax means tax on property that the oowner has to pay.There are four broad types of property – Land, improvement, personal property, and intangible property. Propery tax paid to a national government, a federated state, a country or geographical region, or a municipality.
6.Inheritance tax: It arise on the death of an individual,It is paid by a person who inherits money or property or a tax on the estate of a person who has died.
7.Expatriation tax:This also called emigration tax, is a tax on person who cease to be tax resident.
8.Transfer tax:The tax impose when passing a title to property from one person to another.
9. Wealth Tax:It is based on the aggregate value of all household assets.
Taxes on goods and services
10.Value added tax: It applies the equivalent of a sales tax to every operation that creates value.The purpose of VAT is to generate tax revenues to the government similar to the corporate income tax or the personal income tax.
11.Sales Tax:These are paid for the sales of certain goods and service.
12. Excises: These are considered as indirect tax.This is an inland tax on the sale, or production for sale, of specific goods or a tax on a good produced for sale, or sold, within a country or licenses for specific activities.
13.Tariff tax: These are the kind of tax on imports or exports.
14. License fees: These may be imposed on businesses or individuals engaged in certain businesses.Many jurisdictions impose a tax on vehicles. These kind of tax levies a set amount per individual.
There are also some other taxes like bank tax, Financial transaction taxes etc. But not actually adopted in any major jurisdiction.