Taxation Charges

Taxation Charges

Taxation, charges on income, property, commodities or services made for the conduct of government and the supply of services such as defence, transport, fuel, communications, education, health, housing, pensions, etc. They are usually levied at the point of purchase, sale, import or export, and paid by persons, partnerships or companies to the central government , when they are called 'taxes' or social insurance contributions, or to local authorities, when they are called 'rates'.

Taxes may be progressive (the tax rate increasing faster than the taxable income base, as with income tax and death duties), proportional (the rate varying in the same proportion as the tax base), or regressive (the effective tax rate increasing as the taxable income base decreases, as with indirect taxes on drink, tobacco, cars, etc.). Taxation affects the economy differently according to how far it is progressive or regressive.

When the income tax was introduced in 1799, it was proportional (above the exemption limit). J. S. Mill, Sidgwick, Bastable and other economists were opposed to progressive taxation (see below). But in time, as people with smaller incomes were given the vote, progressive taxation acquired advantages for politicians, who could promise to benefit the relatively many by heavy taxation on the relatively few.

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