Question

Explain any five characteristics of the tax.

Answer 1

• Compulsory payment: A tax is a compulsory payment to the government by the citizens of a nation. It is imposed only by the government. No one can deny paying tax. Refusal to pay tax is subject to legal action by the government.
• General welfare: Tax collected by the government is utilised for common benefits of taxpayers. The government incurs expenditures for the welfare of the nation.
• No fixed basis of taxation: The state can impose the tax on any basis. Thus, income taxes are imposed on the citizens on the basis of income.
• Not an exchange relationship: A tax does not involve any exchange relationship. The state imposes taxes in order to cover the expenses of running the government.
• Establish social justice: The government can also impose high taxes on rich people. This progressive tax policy can reduce the extent of income inequalities within society.

Answer 2

1. It should ensure optimum societal benefits. Taxation should be used to support public services.
2. In a good tax system, taxes are generally applied, which means that those with the same ability to pay are treated equally without prejudice.
3. A tax is a legal obligation.
4. A tax is paid on a regular and periodic basis, as defined by the taxing body.