1 Meanlng of 1axaLlon

1axaLlon ls Lhe acL of laylng a Lax Lhe process or means by whlch Lhe soverelgn Lhrough lLs law
maklng body ralses lncome Lo defray Lhe necessary expenses of governmenL lL ls merely a way of
apporLlonlng Lhe cosL of governmenL among Lhose who ln some measure are prlvlleged Lo en[oy lLs
beneflLs and Lherefore musL bear lLs burdens
As a power LaxaLlon refers Lo Lhe lnherenL power of Lhe sLaLe Lo demand enforced
conLrlbuLlons for publlc purpose or purposes
2 urpose and Scope of 1axaLlon
a 1he prlmary purpose of LaxaLlon on Lhe parL of Lhe governmenL ls Lo provlde funds or
properLy wlLh whlch Lo promoLe Lhe general welfare and proLecLlon of lLs clLlzens Aslde from ralslng
revenues for governmenLal needs LaxaLlon may also be exerclsed Lo aLLaln nonrevenue ob[ecLlves
b ln lLs broadesL and mosL general sense LaxaLlon lncludes every lmposlLlon of charge or burden
by Lhe soverelgn power upon persons properLy or properLy rlghLs for Lhe use and supporL of Lhe
governmenL and Lo enable lL Lo dlscharge lLs approprlaLe funcLlons
3 LssenLlal CharacLerlsLlcs of Lax
a lL ls an enforced conLrlbuLlon Lax ls noL volunLary paymenL
b lL ls proporLlonaLe ln characLer a Lax ls lald by some rule of apporLlonmenL accordlng Lo
whlch persons share Lhe publlc burden
c lL ls generally payable ln money unless quallfled by law
Lax ls usually undersLood Lo be ecunlary burden form of money only
d lL ls levled on persons or properLy a Lax may also be lmposed on acLs LransacLlons rlghLs or
prlvlleges
e lL ls levled by Lhe sLaLe whlch has [urlsdlcLlon over Lhe person or properLy ob[ecL Lo be Laxed
musL be sub[ecL Lo Lhe [urlsdlcLlon of Lhe Laxlng sLaLe
f lL ls levled by Lhe law maklng body of Lhe sLaLe power Lo Lax ls leglslaLlve power
g lL ls levled for publlc purpose or purposes LaxaLlon lnvolves and a Lax consLlLuLes a charge or
burden lmposed Lo provlde lncome for publlc purposes
4 1heory and basls of LaxaLlon
a1he exlsLence of governmenL ls a necesslLy LhaL lL cannoL conLlnue wlLhouL means Lo pay lLs
expenses
b Lhe basls of LaxaLlon ls found ln Lhe reclprocal duLles of proLecLlon and supporL beLween Lhe
sLaLe and lLs lnhablLanLs
3 nonrevenue ob[ecLlves of LaxaLlon
a LaxaLlon can sLrengLhen anemlc enLerprlses or provlde lncenLlve Lo greaLer producLlon
Lhrough granL of Lax exempLlons or Lhe creaLlon of condlLlons conduclve Lo Lhelr growLh
b Laxes on lmporLs may be lncreased Lo proLecL local lndusLrles agalnsL forelgn compeLlLlon or
decreased Lo encourage forelgn Lrade
c