What is Tax?
A tax is a compulsory levy imposed on both the citizens and corporate bodies of a country. It is imposed by the government and its agencies on individuals, firms, goods and services.
Characteristics of Tax
1. Tax is the compulsory levy
2. It is levied by the government through laws
3. Tax payers must attain the age of 18 years
4. It is a sacrifice on the part of the payee
5. It is to cater for the general welfare of the citizens of a nation
Elements of a TAX
Tax base, Tax rate and Tax yield
Tax base is the real object that is been taxed. For example; property, income, commodity or goods, profit etc.
Tax rate is the percentage or proportion of the tax base which is been paid. It is expressed or paid according to the stated percentage i.e. Flat rate.
Tax yield is the real amount received or accrued to the government in tax.
Reasons why Government Impose Tax
1. Generation of revenue for the government
2. Redistribution of wealth for the nation
3. To ensure economic growth and development
4. Employment creation
5. To prevent dumping in the country and consumption of harmful products
6. To protect infant industries
7. To ensure favourable balance of payments