Stages in the development of levy of tax
The levy of tax has crossed over various stages to reach the present state. Prof. E.R.A. Seligman has listed out the stages of development in this regard. We can understand the development in the levy of taxation from the diagram given below.
Stage 1: Tax is considered as gift.
Stage 2: Government requested the public to pay the tax in favor of them.
Stage 3: Individuals felt that they helped the Government.
Stage 4: Individuals felt that they sacrificed for the benefit of Government.
Stage 5: It is the duty of the tax payers to pay the tax.
Stage 6: Necessity to pay the tax to Government is stressed and made is as an obligation.
Stage 7: Compulsory payment of tax without quid pro quo.
General Characteristics of tax
A tax has the following characteristics:
1. Tax is a Compulsory Contribution: Tax is a compulsory contribution by the taxpayers to the Government. The people whom the tax is levied cannot refuse to pay the tax. Once it is levied they have to pay it. Any refusal in this regard leads to punishments.
2. Benefit is not the Basic Condition: For the payment of tax, there is no direct return or quid pro quo to the taxpayers. That is, people cannot expect any return in benefit for the amount of tax paid by them. Because there is no relation between the amount of tax paid by the people and services rendered by the Government to the taxpayers.
3. Personal Obligation: Tax imposes a personal obligation on the taxpayers. When a person becomes liable to pay the tax, it is the duty of him to pay it and in no way he can escape from it.
4. Common Interest: The amount of tax received from the people is used for the general and common benefit of the people as a whole. Now the Government has to render enormous range of social activities, which incur heavy expenditure.
A part of the expense is sought to be raised through taxation of various types. Thus, taxes are said to be the sharing of common burden by the people.
5. Legal Collection: Tax is the legal collection. It can be levied only by the Government both Central and State.
6. Element of Sacrifice: Since the tax is paid without any return in benefit, it can be said that there is the prevalence of sacrifice in the payment of tax.
7. Regular and Periodical Payment: The payment of tax is regular and periodical in nature. It is levied for a fixed period usually a year. Thus, almost all the taxes are annual taxes. The payment of taxes should be regular also.
8. No Discrimination: Tax is levied on all people without any discrimination of caste, creed etc. but according to their ability to pay.
9. Wide Scope: Tax is levied not only on income but also on property and commodities. To enhance the revenue and to bring all the people under the tax net, the Government imposes various kinds of taxes. This enhances the scope of taxes.