The term "tax" has been derived from the French word "Taxe" and etymologically, the Latin word "Taxare" is related to the term "Tax", which means "To charge". Tax is a contribution exacted by the state. It is a non-panel but compulsory and unrequited transfer of resources from private sector to public sector, levied on the basis of predetermined criteria.
According to Article 152 (1) of constitution of Bangladesh, taxation includes the imposition of any tax, rate, duty or impost, whether general, local or special and tax shall be construed accordingly.
Taxes are most important source of revenue of modern governments. It is a compulsory levy, to be paid by the citizens who are liable to pay it, imposed by the government.
Types of Taxes
Taxes have been variously classified by different economists. The classifications have been made on different basis, which are-
1. Classification on the basis of number of Taxes.
2. Classification on the basis of impact and incidence of tax.
3. Classification o the basis of structure of tax rate.
4. Classification on the basis of subject matter of taxation.
5. Classification on the basis of elasticity of tax.
6. Classification on the basis of tax base.
7. Classification according to change in government revenue: [Musgrave and Musgrave, 1989, pp216-217]
8. Classification according to taxing authority.
The descriptions of different types of taxes are given below:
1. Classification on the basis of number of Taxes:
i) Single Tax: When the tax system of a country incorporates only one tax, it is called single tax. In ancient times tax was levied on person as poll tax or head tax.
ii) Multiple Taxes: When the tax system comprises different types of tax, it is called multiple taxes. At present, all the countries in the world follow multiple tax system.
There are some Merits and Demerits of Single and Multiple Tax. These are given below:
Merits of Single Tax
The single tax can be adjusted to the needs of the government.
In single tax system every member of the society contributes to the upkeep of the government.
A single tax is almost neutral from allocation effects.
Demerits of Single Tax
Because of inequality in income single tax becomes a burden for the poor families.
Single tax collects fewer amounts of revenues, whereas government income is increasing day by day.
Only one tax is charge irrespective of income class, that is poorer and richer both have to pay equal amount of tax which is completely irrational in today's economic condition.
Single tax was practiced in ancient period. It is not applicable in today's dynamic economy.