Meaning and definition of a tax

Meaning and definition of a tax

A tax is one of the important sources of public revenue. A tax is a compulsory charge or payment levied by the government on an individual or corporation. Therefore an element of compulsion is involved in taxation. Other sources of public revenue are excluded from this compulsory element. There is no direct give and take relationship between a taxpayer and the government.

Definition of a tax

According to Prof. Seligman, 'A tax is a compulsory contribution from the person to the State to defray the expenditure incurred in the common interest of all without any reference to the special benefits conferred'.

In the words of Dalton, 'A tax is a compulsory contribution imposed by the public authority, irrespective of the exact amount of service rendered to the taxpayer, in return for which no specific and direct quid pro quo is rendered to the payer'.

From these definitions, it is clear that tax is a compulsory contribution. It means that the State has the right to tax. Refusal to pay the tax is punishable. The phrase 'without quid pro quo' means the absence of direct and proportional benefit to the taxpayer from the government.

Canons of Taxation

Canons of taxation are considered as fundamental principles of taxation. Adam Smith laid down the following canons of taxation:

1.        Canon of equity

2.        Canon of certainty

3.        Canon of convenience

4.        Canon of economy