What is taxation?
Taxation is an imposition of compulsory levies on individuals, entities, goods and services by government in order to fund its expenditures. The taxes are often levied on products sales, import and export duties, properties, services, etc. Taxes are fundamental to raising funds for development purposes.
Before now, taxes were the earliest form of government revenue but they were not as many as they are now. Governments often levy taxes on import duties and less on domestic products. They levied what would be better explained now as overhead tax and the properties and gross sales. But nowadays, decisions on taxes are now at the mercy of parliamentary bodies.
Taxes in recent times now flow from import duties, income tax, labour tax, sales tax, Value added tax, consumption tax, payroll tax, corporate tax, property tax and lots more.
Purpose of tax mechanism in an economy
Generally speaking, taxes are levied to generate funds for governments. Although it differs with climes and government, the following are possible purposes for tax mechanism as a revenue generation source.
• It helps to finance government and its projects.
• Secondly, taxes helps to manage resource allocation
• Taxes help to manage income distribution. This means that it helps to reduce inequalities among citizens
• Taxation is used to maintain economic stability. This means that government use taxes to maintain high employment rate, maintain price stability, manage dept, monetary policy, government expenditure policy through tax policies.
That was in a more general sense; this project topic however seeks to evaluate taxation as a mechanism for revenue generation In Nigeria. Editor's source
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