What does tax mean in simple words?
Tax is an amount of money that you have to pay to the government so that it can pay for public services such as roads and schools. The government created a new tax on the retail sale of certain goods and services. A retail sales tax is levied on the purchase of a commodity.
The purpose of taxes is to provide the government with funds for spending without inflation. Taxes are used by the government for a variety of purposes, some of which are: Funding of public infrastructure. Development and welfare projects.
Income Tax is a tax you pay on your income. You do not have to pay tax on all types of income. This guide is also available in Welsh (Cymraeg). You pay tax on things like: money you earn from employment.
: a charge usually of money imposed by authority on persons or property for public purposes. : a sum levied on members of an organization to defray expenses. : a heavy demand. tax.
It derives from the Latin taxare which means 'to assess'. Before that, English used the related word 'task', derived from Old French. For a while, 'task' and 'tax' were both in common use, the first requiring labour, the second money. 'Tax' then developed its meaning to imply something wearisome or challenging.
Tax is a vital source of revenue for most governments enabling them to fund essential services and infrastructure for their citizens. Of course, revenues will not automatically be used for such social goods.
| Taxes | ||
|---|---|---|
| Direct Taxes | Indirect Taxes | Other Taxes |
| Income Tax | Sales Tax | Property Tax |
| Wealth Tax | Goods & Services Tax (GST) | Professional Tax |
| Gift Tax | Value Added Tax (VAT) | Entertainment Tax |
progressive tax—A tax that takes a larger percentage of income from high-income groups than from low-income groups. proportional tax—A tax that takes the same percentage of income from all income groups. regressive tax—A tax that takes a larger percentage of income from low-income groups than from high-income groups.
Examples include general and selective sales taxes, value-added taxes (VAT), taxes on any aspect of manufacturing or production, taxes on legal transactions, and customs or import duties. General sales taxes are levies that are applied to a substantial portion of consumer expenditures.
The first elements of income tax can be found during the eras of the Egyptians and Antiquity in Rome. The Romans introduced public taxes comprising of modest assessments on owned wealth. The more money someone had in their property, the more money they paid.
What is the difference between tax and income?
When it comes to income tax, it is the amount an individual has to pay for the money they earn for the said financial year. The tax liability is calculated based on the income, tax slab the person falls under and other factors such as rebate, savings, investments, etc.
A tax is a mandatory fee or financial charge levied by any government on an individual or an organization to collect revenue for public works providing the best facilities and infrastructure. The collected fund is then used to fund different public expenditure programs.
Taxation not only pays for public goods and services; it is also a key ingredient in the social contract between citizens and the economy. How taxes are raised and spent can determine a government's very legitimacy.
The financial requirements of the Civil War prompted the first American income tax in 1861. At first, Congress placed a flat 3-percent tax on all incomes over $800 and later modified this principle to include a graduated tax. Congress repealed the income tax in 1872, but the concept did not disappear.
Taxation has its historical roots in the first years of record-keeping: the earliest signs are recorded on clay tablets found in Sumeria in southern Mesopotamia, part of modern-day Iraq. Tax records there date from around 3300 BC.
This video explores the concept of tax and explains how paying tax will help the government to provide better for its goods and services, like education, housing and roads. Governments provide public services such as police services and roads to the public. The government also pays the salaries of civil servants.
Tax money helps to ensure the roads you travel on are safe and well-maintained. Taxes fund public libraries and parks. Taxes are also used to fund many types of government programs that help the poor and less fortunate, as well as many schools!
If you don't pay the amount shown as tax you owe on your return, we calculate the Failure to Pay Penalty in this way: The Failure to Pay Penalty is 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid. The penalty won't exceed 25% of your unpaid taxes.