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tax genesis

Taxes are one of the most important basic resources for financing the general budget and state expenditures. With the aim of securing various services for citizens, paying their salaries in the government sector, rehabilitating infrastructure, in addition to supporting basic commodities to provide them to citizens at a lower price. To contribute to public expenditures, and it was optional, and then developed and appeared in many different civilizations such as the civilization of the Nile Valley, and then entered a broader stage in the era of the Roman Empire, and it was imposed on many sectors such as agricultural crops, and with the passage of time the process of its development proceeded, until The tax was regulated by passing an organized tax law based on well-thought-out principles and principles.

What are taxes?

In the modern economy, taxes are the most important source of government revenue, and they differ from other sources of income and fees, as they are mandatory mandatory fees on individuals, institutions and various entities to whom the payment terms apply, as taxes are supposed to be collected for the benefit and welfare of their payers as a whole, and there may be an expected link Between taxes paid and benefits accrued, eg payroll taxes are sometimes called "contributions" as in the USA, but on the whole, the link between taxes and direct benefits is weak.

Taxes - collection - is defined as a monetary amount or compulsory fees imposed by the state on individuals, companies or institutions and charged by the government, whether local, regional or national, in order to finance government activities and support the various sectors that the state spends on such as; Education, the army and health, in addition to assistance in financing business and public services, rehabilitation and maintenance of infrastructure projects such as: building and repairing roads and sewage extensions. In general, the collected tax is used to improve the economic and living situation of citizens in the country.
What are taxes?
What are taxes?

Types of taxes

Taxes are economically divided into several different types, and according to the method of collecting them, they are mainly divided into two basic types; Direct and indirect taxes, and each type has its own examples. The following is an explanation of each type and the examples related to it:
  • Direct taxes: simply taxes paid by taxpayers, whether individuals or companies, directly to the government, and are usually based on the principle of the taxpayer's ability to pay according to income, consumption, or net wealth; That is, whoever has more resources, whether salary or more profits, pays a higher tax rate, and is characterized by its contribution to distributing wealth equitably, as it takes more money from the rich for the government to use to finance services that serve the poor, and types of direct tax; Income tax, profit tax, wealth tax and capital tax.
  • Indirect taxes: they can be defined as taxes that are not paid by individuals and companies directly to the government but are paid through an intermediary, indirect taxes are imposed on the production or consumption of goods and services or on various government transactions, including imports and exports. One of its most important features is that it is within the prices of goods and services, so that the taxpayer does not feel it, and most importantly, it reduces the chances of tax evasion if done correctly and correctly, and its types include sales tax, value-added tax, customs tax, and property tax.

tax objectives

The primary objective of the existence of taxes is to increase revenue to meet the increasing public expenditures of the state, but it is not the only objective, in other words, taxes have some other objectives that are not related to revenue, and in the modern world and with the growing economic development, taxes are used as a tool for the so-called economic policy, which affects On the total volume of production, consumption, investment, site selection, industrial fields, payments, income distribution, and more, and economic development is one of the important objectives of taxes. New, the process of capital growth can take place smoothly, and among other goals; Full employment, price stability, balance of payments reduction, and non-revenue goals are to reduce income and wealth inequality. This can be done by taxing the rich at a higher rate than the poor or by introducing a progressive tax system.

Tax principles

The application of taxes depends on a set of basic principles and rules that the state, represented by the government, should use and take into consideration and adhere to when developing and approving a tax system that is successful and effective and enhances the compatibility between the interests of all the pillars of tax. The maximum crucial of those ideas are:
  • The principle of universality “fairness”: means the spread of the tax system across the widest number of members of society in a fair manner, that is, that tax burdens are not imposed on one person only, and in a manner commensurate with the financial ability of the person in charge.
  • The principle of broad use of taxes: It means targeting taxes when there is a specific use of them only, that is, when there is a clear reason between the tax and use, and in general the taxes are collected for general use.
  • The principle of benefit: It means that what the taxpayer pays in taxes must be directly proportional to the benefit received and achieved for him. Taxed individuals who benefit greatly from the services provided by the state must pay a high tax and vice versa.
  • Expense matching principle: The level of tax paid by taxpayers should roughly match the amount of expected expenditure, so that the taxing authority is careful to cover costs, and does not impose an excessive tax.
  • The principle of universality: It means to levy taxes only when there is a definite use of it, i.e. there is a clear reason between tax and use, in all other cases the tax is collected for general use.
  • The principle of ease of compliance and commitment: It means that the administration of the tax should be as simple as possible, so that the person who pays it does not face much difficulty in complying with the requirements for its performance, and ideally the taxes are invisible to the taxpayer.
  • The principle of limited exemptions: It means that any tax exemptions must be within a limited period of time and for a specific reason, after which the exemptions are disposed of, where the purpose of exemptions is only to encourage certain types of behaviors and behaviors, which are usually related to economic development.
  • The principle of understandability: It means that the method of calculating and paying the tax should be easy for the taxpayer to understand, thus avoiding and avoiding any errors in the transfer or calculation of the tax.

tax problems

Since the tax involves deducting part of the income of individuals and various organizations, it is expected that there will be problems and obstacles as a result of some resorting to trying to get rid of paying their tax dues in various ways, whether legal or illegal. The most important methods of eliminating tax payments are as follows:
  • Tax evasion: It means that the taxpayer performs some legitimate or illegal act with the aim of reducing the amount of tax due on him. He may do this for several reasons, including taking advantage of ambiguity and the presence of some loopholes in the tax law, and the process of evasion through those loopholes is considered weak legal penalty and penalties for evaders. From tax as a reason to evade paying tax dues, so that the evader balances the benefit that he achieves from evasion and the penalties that can be inflicted on him in the event of discovering something that he evaded. If the penalties are only financial and of low value, this will encourage him to evade.
  • Tax avoidance: It means that the taxpayer is able to avoid paying the tax by exploiting loopholes in the law without appearing in the position of the violator of the law; That is, the tax is avoided by resorting to the law itself. As a result of the lack of accuracy of the texts of the law, their lack of drafting or their failure to cover all possibilities, a person may be able to distort the texts or interpret them in his favor without violating them, and therefore he is not violating the law.
  • Double taxation: It means the imposition of two or more taxes on the taxpayer or the same tax substance, or the imposition of the same tax or a tax of the same type more than once on the same person and the same money in one period, and the most common thing that occurs in international trade when a tax is imposed on the same substance in two different countries.
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