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INTRODUCTION

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Definition of TaxTaxes are compulsory payment to government withoutexpectation of direct return in benefit to the tax payer.

- P. E. Taylor

- Dalton

A tax is a compulsory contribution imposed by a publicauthority irrespective of the exact amount of servicerendered to the tax payer in return and not imposed aspenalty for any legal offense.

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Characteristics of Tax Tax is a payment to the Government by the people.

Payment of taxes is non-penal and compulsory.

An element of sacrifice is there in the payment of a tax as

they pay the taxes in order to ensure public interest.

The aim of tax collection is to finance the governmentexpenditure to ensure public interest and welfare.

Tax is not the cost of the benefit conferred by the

government on the public. It is one of the prime sources of revenue for the government.

Tax is not any fine or penalty.

Tax can only be imposed by the government of a country.

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Canons of Taxation

Canon ofEquality

Canon ofCertainty

Canon ofEconomy

Canon ofConvenience

According to Adam Smith

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Classification of TaxesClassification on the Basis of number of taxes:

Single Tax

Multiple Tax

Classification on the Basis of impact and incidence of tax:Direct Tax

Indirect Tax

Classification on the basis of structure of tax rate:

Proportional Tax Progressive Tax

Regressive Tax

Degressive Tax

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Classification of Taxes(Contd.)Classification on the basis of elasticity of tax:

Elastic tax

Inelastic tax

Classification on the basis of tax base: Income tax

Wealth tax

Value Added Tax

Expenditure tax Classification according to taxing authority:

Central tax

Local tax

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Difference between Direct and Indirect Tax

Direct Tax Indirect Tax

BurdenCannot be shifted Can be shifted

Impact &Incidence

On same person On different person

ElasticityGenerally elastic inelastic

Effect

Adverse effect on taxpayers willingness to

work and save No direct adverse effect

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Characteristics of a good tax system Tax should be levied on the basis of fundamental principles of

taxation like the principle of least sacrifice, cost and benefit etc.

The taxes should be so imposed that they should follow the most

importantcanons.

Tax system should be balanced containing both direct and indirectnature of taxes so that it can maximize government revenue.

Efficient tax authority and effective taxation procedure.

Tax system should have positive effect on both production anddistribution without causing any adverse effect upon ability andwillingness to work, save and invest.

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Role of Tax in the Economic

Development of a CountryOptimum

allocation ofavailableresources

Raising

governmentrevenue

Encouragingsavings andinvestment

Reduction ofinequalities inincome and

wealth

Acceleratingeconomic growth

Price stability

ControlMechanism

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Tax Structure in BangladeshTaxes on Income and Profit

Income tax Company

Income tax Other than Company

Taxes on Property & Capital Transfer

Estate Duty and Gift Tax Wealth Tax

Narcotics Duty

Land Revenue

Stamp Duty non judicial

Registration

Taxes on Goods and Services Customs Duties

Excise Duties

Value Added Tax (VAT)

Supplementary Duty (on luxury items and in addition to VAT)

Taxes on Vehicles

Electricity Duty

Other Taxes and Duties (travel tax, turn over tax, etc.)

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