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Fundamental principles of costing

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What is tax ?


Taxation is the process by which governments finance their expenditure by imposing charges on citizens and corporate entities. Tax is the basis for taxation. A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state.
Taxes are also imposed by many sub-national entities. Taxes consist of direct tax or indirect tax, and may be paid in money or as its labor equivalent.
A tax may defined as a “pecuniary burden laid upon individuals or property to support the government a payment exacted by legislative authority “. A tax is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority. A tax may also be defined as any contribution imposed by government whether under the name of toll, tribute, gable, impost, duty, custom, excise, subsidy, aid, supply, or any other name.
According to Prof. Seligman, “tax is a compulsory contribution of the wealth of a person to the government to defray the expenses incurred in the common interest of all, without reference to special benefits conferred”.
According to C.F Bastable, “tax is a compulsory contribution of the wealth of a person or body of persons for the service of the public powers”.
According to Taylor, “taxes are compulsory payments to the government without expectation of the direct return or benefit to the tax-payer”.

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