Categories of Taxation

Taxes are apparently necessary so that a society can deliver sound services and goods to its citizens. A society is never complete without a taxation system and it is part of the people’s social responsibility to pay taxes in the right time and in the authorized tax collector or government entity. There are many types of taxes and each type falls into a particular category. Every type of tax has its own nature and specifications so it is one of the sole responsibilities of citizens to widen their awareness regarding the broad scope of taxation.

A tax is defined as any fee charged or levied by the government. Taxes can sometimes be on fixed amounts but there are instances that these are calculated as particular percentage of an action value. Common examples of action value that are typically taxed are buying items, owning a property or house and more. Through a sound taxation, government is able to generate revenue and this is utilized as tool for economy or public services support.

Regressive and Progressive

There are three known categories of taxation namely regressive tax, progressive tax and the type of tax in between known as the proportional tax. Progressive tax is the tax that aims to shift tax incidence or burden of taxation to those individuals with high purchasing power and away from individuals with low purchasing power.

Regressive tax on the other hand is another category of taxation with an aim of shifting tax incidence to those with low purchasing power and away from individuals with high purchasing power. Proportional tax is a particular type of tax with a goal of entire population that carries the same effective and valid tax incidence.

Types of Taxation

Taxes are innumerable and taxation also falls into different types or categories and these are as follows:

• Income taxes are charged or levied on a particular percentage of the income.
• Real Estate tax is levied on homes and lands and is usually utilized by localities in paying for schools.
• Sales taxes are computed as percentages of purchases made by consumers, usually with several item categories excluded or at times with rebates to offset the taxes’ regressive nature.
• “Sin ‘’ taxes for top-sale taxes are being charged to sinners usually during the time of  purchasing items that  are considered sinful such as alcohol, cigarette and other dangerous paraphernalia.
• Estate taxes are charged or levied on wealth that is left by a deceased typically with huge deductible.
• Poll taxes are considered as fixed taxes which are different from taxes that are based on the portion of an individual’s income.
• VAT or Value Added Tax is a type of tax charged to processors and manufacturers on difference between cost of raw material and resulting product.

No matter what the differences in types or taxations may be, these do not change the fact that individuals got the responsibility of paying the right tax on the right time. Paying taxes is one social responsibility that must be fulfilled ideally.

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