Public Revenue - Tax Revenue

Tax Revenue:
1) According to Prof. Taussig : “The essence of a tax as distinguished from other charges by government is the absence of a direct quid pro quo between the tax payer and the public authority.” 
2) According to Prof. Seligman, “A tax is a compulsory contribution from the person to the government without reference to special benefits conferred.”
 
A tax possesses following essential characteristics :
1)It is a compulsory contribution to the government and every citizen of the country is legally bound to pay the tax imposed upon him. It is a major source of revenue to the government. If any person does not pay a tax, he can be punished by the government.
2)Tax is paid by a taxpayer to enable government to incur expenses in the common interests of the society.
3)The payment of a tax by a person does not entitle him to receive any direct and proportionate benefits or services from the government in return for the tax. 
4)Tax is imposed on income, property or commodities and services.

Types of Taxes :
There are two main types of taxes. 
1) Direct Tax
2) Indirect Tax. 
 
1) Direct Tax :
It is paid by the taxpayer on his income and property. The burden of tax is borne by the person on whom it is levied. As he cannot transfer the burden of the tax to others, impact and incidence of direct tax falls on the same person. For example,personal income tax, wealth tax etc. 
Direct taxes are further classified into three categories depending upon the rate of tax. These are:
1) Proportionate tax :
When a tax is levied at the same and constant rate on all incomes, it is called proportional tax.
2) Progressive tax :
A tax, the rate of which increases with every increase in income is called progressive tax. In India we have progressive tax rate system.
3) Regressive tax :
In regressive taxation, the larger the income of a tax-payer, the smaller is the proportion of the tax levied on him.

2) Indirect Tax :
It is levied on goods or services. It is paid at the time of production or sale and purchase of a commodity or a service. The burden of an indirect tax can be shifted by the taxpayer (producers) to other person/s. Hence, impact and incidence of tax are on different heads. For example, newly implemented Goods and Services Tax [GST] in India has replaced almost all indirect taxes, custom duty.