Taxation Definition, Type and Objectives Of Taxation,

A tax which is a major source of public revenue has been defined as an obligatory transfer of money from the tax-payer to a public authority. That is a compulsory payment levied by government to all eligible persons.
In view of the compulsory nature of tax and strong aversion of tax payment, effort must be constantly made to make any tax system attractive and to provide the government with the revenue it need so as provide essential services to the whole citizenry.

           Objectives Of Taxation 

1. To encourage saving and regulate expenditure e.g tax on luxuries 
2. To provide incentives for industry and investment e.g tax grants or allowances for research work by the government and investment allowance for prospective investors. 
3. To protect home industry by imposing discriminatory tariff.
4. To achieve desirable social ends, e.g discourage excessive smoking or drinking.
5. To provide free social services like health and education. 
6. To adjust imbalance e.g imposition of prohibitive import duties. 
7. Imposition of capital transfer tax which is a direct tax will help to check excessive transfer of wealth to indolent beneficiaries to active productive participations rather than while away precious time expecting unmerited transfer of wealth. 
8. To reduce inequality of income progressive income tax had been imposed by many governments.
9. When operated as PAYE, it yield good among of revenue to the government because of the very low cost of collection. 

To check adverse balance of payment. This could be achieved by raising tax at a level higher than necessary to cover government expenditure thereby achieving budget surplus. 

              Principles Of Taxation

1. Principle Of Equity: This principle is of the opinion that both the rich and the poor will be treated equally in payment of taxes. This principle states that both the rich and the poor will pay a certain percentage of their income as tax. To ensure the principle of equity or equality in tax administration,  both the rich and the poor will be asked to pay a certain percentage for example:- 5%, 10%, 12%, 15% etc as the case may be depending on what is acceptable or considered to be fair by the government.
2. Principle Of Certainty: This principle states that the amount which tax payer should pay must be clearly stated to him or known to him. The time of payments and the manner of payment should be equally stated. 
3. Principle Of Economy: This principle of economy states that the money to be spent in the collection of taxes should not be more than the tax collected. 
4. Principle Of Convenience: This principle states that the time of payment should be convenient to the tax payer. So the payment of tax should be arranged such that the tax payers should not experience any form of inconvenience in the payment of tax. 
5. Principle Of Flexibility: The principle of flexibility is also important in administration of tax, Adam Smith emphasized that it should not be rigid that it has to be flexible. In other words, there will not be elasticity of tax system without can be changed to meet the revenue requirements of the state.  This is a good attribute of flexibility nature of tax system. 
6. Principle Of Diversity: Principle of diversity of taxation is very important, in a bid to achieve the objective of tax.  This principle emphasizes that tax system should be diversified in other to generate reasonable revenue that will keep the economy moving. In addition, this principles states that  Nations should diversify their tax structures so as to generate more revenue. Therefore, States and Nations should not practice only one single tax system,  so they should increase their tax structures to gather more more wealth for the growth and development of the economy from main sources.

                              Type Of Taxes
There are two types of taxes namely; Direct and Indirect Taxes 

1. Direct Taxes: These are taxes levied directly on the income and property of individuals and companies. Their burdens are borne directly by tax payers. Direct taxes include the following:

• Personal income tax: It is the tax levied on the income of an individual usually in a given fiscal year.
• Company income tax: This is the tax levied on the net earnings of profits a company. Allowable deductions are made on the gross profit before the net income is determined 
• Expenditure Tax: After the net income of a tax payer has been ascertained certain amount from that net is saved. The difference between the net and income earner will spend on other things. Taxes are paid on such differences.
• Poll Tax: This is a flat tax rate paid low income earners or those without employment at all, particularly those living in rural areas. They pay definite amount, say $1 for every taxable adult. 
• Capital Gains Tax: A capital gain occurs when capital assets (e.g share) are sold and profit is realize. The difference between the purchase price and sale price is taxed. 

 2.  Indirect Taxes: Indirect taxes are levied on person who are not final consumers. The incidence of indirect tax is on the tax payer while the burden is on the final consumer. Under indirect taxes are:

• Export Duties: These are taxes on goods that are exported to other countries. 
• Import Duties: These are taxes Levied on goods that come into a nation. 
• Excise Duties: They are levied on goods produced domestically whether sold or not.
• Sales Tax: Sales tax are levied on goods that are sold. Such taxes are done at only one stage during the sales transaction. It is either taxed during wholesale or during retail but not on both. 
• Value Added Tax (VAT): Every product has two values namely; the value resulting from all input that made the production of that good possible. Secondly, the difference between the two is the value added and that is what is taxed.