ABSTRACT

This chapter examines the multiplicity of taxes. It reviews in detail the multiplicity of laws that define taxes; the administrative institutions that collect taxes; and the different types of economic activity subject to taxation. The economic activities that can be taxed may be grouped under three broad headings: income, expenditure and wealth. The income tax, the largest single tax, can be justified as a tax based upon the ability to pay, since the rate rises progressively with income. Taxation on expenditure can take two different forms: particular goods and services can be taxed, or the total expenditure of an individual could be subject to tax. Wealth is more difficult to tax than income or expenditure because wealth can exist without being involved in any market transaction during a year. The chapter concludes that by comparing the sums contributed to the fisc by millions of taxpayers with the benefits that ordinary citizens receive from programmes financed by taxation.