Examples of Principal Taxation (Economics)

Adequacy taxes should be just enough to generate revenue required for provision of essential public services and broad basing taxes, should be spread as wide as possible section of the population.  There are two types of taxation direct and indirect.  Those who benefit from services should be the ones who pay for them.  People should pay taxes in proportion to the amount of services or benefits they receive.  Taxation is a payment levied by government for which no good or service is received directly in return.  The amount of tax people pay is not related directly to the benefit people obtain from the provision of a particular good service. Direct taxes are paid by taxation on the income of the wage earner. This form of taxation is unavoidable, and for simplicity usually collected before the worker collect his/her wages.  Personal, corporate and property taxes are examples of direct taxes. Indirect taxation is often avoidable and is not taken from wages. An example of indirect taxation is VAT (Value Added Tax) or sales tax placed on goods and services. This is tax, but not all people have to pay it, and can choose not to. The fairest tax is one based on your financial ability to support government activities. An alternative to the ability-to-pay principle of taxation is the benefit principle of taxation, which is the idea that individuals should be taxed in proportion.