What are the taxes

Taxes

Taxes are one of the most important forms of public revenue for countries. Its theory has great importance among the theories used in public finance, and is distinguished by its important role in contributing to reaching the goals of financial policy. Therefore, many concepts and definitions related to taxes have emerged. They are defined as mandatory duties determined by states, and individuals are obligated to pay their value free of charge. In order to provide assistance to countries in achieving societal goals, and among its other definitions is a contribution of a monetary or in-kind nature, which individuals provide to the countries in which they live, whether they receive a benefit from public services or not, and countries impose these taxes because they are linked to economic, political, and financial goals. .

The development of taxes in the economy

Taxes witnessed development in economic thought coinciding with the emergence of many economic intellectual stages, and the following is information about the most important of them:

• Taxes in physiocratic economic thought: It is an intellectual field that appeared in the eighteenth century AD in France, and the thinkers of this economy were interested in the unified taxes imposed on agricultural lands. It is the only source of wealth, and the owners of these lands are the societal group that produces net revenues. Therefore, there is no point in imposing taxes on owners of other classes.
• Taxes in classical economic thought: This thought was concerned with the necessity of achieving a balance between estimates of public revenues and public expenditures. The best financial management depends on the existence of a balance in the budget, and avoiding any risk of a deficit appearing in it. At this intellectual stage, a group of tax ideas emerged from several economic thinkers, the most important of which are:
  • Taxes according to Adam Smith; He was keen to identify four foundations for taxation, which included collection, appropriate collection, certainty, and justice. Smith pointed out the necessity of taxation; Because it is considered one of the main means of financing for countries.
  • Taxation according to David Ricardo; He saw that the industrial, agricultural, and commercial sectors should stay away from state interference, but when states want to meet their own expenses, they must deduct the value of these taxes. Ricardo also considers them a type of rent specific to real estate ownership that affects the real estate price, but does not affect the price. Consumer.

types of taxes

There are several types of taxes, each of which has its own scope. The most important of these types are:

• Taxes on persons: It is one of the oldest types of taxes known since the Middle Ages. It was imposed on all individuals, and is characterized by its ease of calculation, collection, and imposition.
• Taxes on money: It is imposed on all of an individual’s property, and is characterized by fairness and abundance, but it is not possible to limit all of an individual’s property; Which leads to encouraging them to evade taxes.
• Direct and indirect taxes: These are common and widespread taxes in the modern era, but it is difficult to differentiate between them. Therefore, reliance is placed on using a set of standards to compare these taxes, which are:
  • The stability of the taxable service or product: These are all materials on which taxes are imposed. If they are constant on an ongoing basis, they are considered direct taxes, but if they are not constant, then they are considered indirect taxes.
  • Collection standard: It is based on the nature of the administrative body that collects taxes or the method used to collect them. This standard varies between countries of the world.
  • Shifting the burden of taxes: which is the distinction between indirect and direct taxes depending on the individuals who bear them. The tax is considered direct when it is borne by the last taxpayer, while the tax is classified as indirect if it is transferred from the taxpayer to another person.
• Income taxes: These are taxes imposed by states on individuals living in their societies, and are considered important taxes. Therefore, many different concepts and definitions have appeared among thinkers and writers, and these taxes include two types:
  • General income tax: It is the dependence of all an individual’s income on only one tax, regardless of whether the individual has multiple sources of income.
  • Tax on branches of income, also known as specific taxes; That is, the tax is imposed according to the type of income of the individual, and this depends on the division of the main sources of income. Where there is income resulting from work, which is subject to the wage tax, and there is income resulting from capital, which is subject to the tax on movable property.

Basic rules of taxes

The application of taxes depends on a set of basic rules that are considered foundations that countries adhere to. These rules seek to enhance harmony between the interests of taxpayers and the public treasury. Below is information about the most important of these rules:

• Equality rule: It is considering tax justice as one of the important principles of an effective tax system. The tax legislating authority seeks to apply this justice while distributing burdens among taxpayers. As this concept developed with the development of societies, what traditionalists mean by justice is the contribution of all members of society to bear the state’s expenses, according to the relative cost of each of them, meaning that their contribution is proportional to their incomes.
• The rule of certainty: It is a rule that indicates a good tax that is clearly defined. Meaning that it is an explicit and specific tax, as the method and time of its collection are known, and its price is clear and specific. This rule indicates the existence of prior knowledge on the part of the individual charged with the tax by the state.
• Stability rule: It is that tax revenues do not change as a result of economic changes. Specifically during a period of economic depression, but tax revenues often increase when production and public incomes increase.
• Flexibility rule: It is that the change in income in terms of space and time is accompanied by a change in tax revenues. That is, flexible taxes are those that witness an increase in their value. Due to the rise in its rates while there is no apparent contraction in its tax base, and then the appearance of a decrease in its revenues.