Tax

Tax, an impost exacted by the sovereign or ruling body of a conntry either for public or private ends. The principles which should guide the Government of a civilised country in the matter of taxation were formulated by Adam Smith in four famous maxims: (1) "The subjects of every State ought to contribute towards the support of its Government as nearly_as possible in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the State." (2) "The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain." (3) "Every tax ought to be levied at the time or in the manner in which it is most likely to be convenient for the contributor to pay it." (4). "Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the State." Taxes are usually distinguished as direot or indirect. According to J. S. Mill, a direct tax is one demanded from the very persons who it is intended or desired should pay it, whereas in the case of an indirect tax the actual payer is able to shift the burden on to another. The income-tax and dog-tax are examples of the former class, customs and excise duties of the latter. Each system of raising taxes is attended with certain advantages and disadvantages. In favour of direct taxation it may be said that it is more easily adjusted to the resources of the payer, while, on the other hand, the incidence of indirect taxation being less obvious, it is not resented in the same manner by the person who really suffers by it. The right of determining the annual amount of the public revenue and the methods by which it shall be raised has from time immemorial belonged to the House of Commons. The drawing up of the "Budget" is the function of the Chancellor of the Exchequer. Taxes raised for local purposes by municipal and other local authorities are called rates.