taxations

Taxation refers to the compulsory financial charges or other levies imposed on individuals and businesses by a government. Its primary purpose is to fund public goods and services, but it also serves to redistribute income, influence behavior, and stabilize the economy. Tax systems aim to raise revenue while balancing equity, efficiency, simplicity, and transparency.

Tax bases are the economic phenomena that taxes are applied to. Common bases include income (wages, profits), consumption (sales taxes and value-added taxes), wealth (property and estate taxes), and trade (tariffs). Direct taxes are paid by the entity or person carrying the burden, such as personal income tax and corporate tax. Indirect taxes are collected from others in the value chain and passed on to the government, such as sales taxes andVAT. Tax rates can be progressive, where higher incomes are taxed at higher rates; proportional, with a constant rate; or regressive, where lower incomes bear a larger share of the burden. Tax design uses deductions, exemptions, and credits to address policy goals and mitigate distortions.

Administration involves assessment, collection, enforcement, and compliance. Tax authorities implement withholding at source, self‑assessment, and audits. International considerations include transfer pricing rules, tax treaties to avoid double taxation, and efforts to prevent base erosion and profit shifting.

Taxation has evolved with state development and economic change. Contemporary debates focus on efficiency and fairness, the digital economy, globalization, and how to curb avoidance while ensuring a stable revenue base for public services.