Principles of Taxation
Classification of Taxes
The most common and traditional classification of taxes is as follows:
- This is a tax whose burden is borne by the person on whom it is levied.
- Examples include PAYE, corporation tax, capital gains tax, wealth tax etc.
- Considered to be progressive
Indirect taxes are those paid by consumers when they buy goods and services.
- May result with higher retail price.
- Levied equally irrespective of income.
- Examples include VAT, excise tax, customs duty.
- Considered to be regressive.
However, its good to note that some taxes exhibit both
progressive and regressive characteristics.