2010

DIRECT TAXATION IN ZIMBABWE

INTRODUCTION TO DIRECT TAXATION
The term direct tax generally means a tax paid directly to the government by the
persons on whom it is imposed.

In the general sense, a direct tax is one paid directly to the government by the persons
(juristic or natural) on whom it is imposed (often accompanied by a tax return filed by
the taxpayer). Examples include some income taxes, some corporate taxes, and
transfer taxes such as estate (inheritance) tax and gift tax. In this sense, a direct tax is
contrasted with an indirect tax or "collected" tax (such as sales tax or value added tax
(VAT)); a "collected" tax is one which is collected by intermediaries who turn over the
proceeds to the government and file the related tax return. Some commentators have
argued that "a direct tax is one that cannot be shifted by the taxpayer to someone else,
whereas an indirect tax can be."[1]

An 18th century writing about the tax explained:

“ The power of direct taxation applies to every individual, as congress under this
government is expressly vested with the authority of laying a capitation or poll-
tax upon every person to any amount. This is a tax that, however oppressive in
its nature, and unequal in its operation, is certain as to its produce and simple
in it collection; it cannot be evaded like the objects of imposts or excise, and will
be paid, because all that a man hath will he give for his head. This tax is so
congenial to the nature of despotism, that it has ever been a favorite under
such governments. Some of those who were in the late general convention
from this state, have long labored to introduce a poll-tax among us.
The power of direct taxation will further apply to every individual, as congress
may tax land, cattle, trades, occupations, &c. to any amount, and every object
of internal taxation is of that nature, that however oppressive, the people will
have but this alternative, either to pay the tax, or let their property be taken for
all resistance will be vain. The standing army and select militia would enforce
the collection.[2] ”
[edit] U.S. constitutional law sense

In the United States, the term "direct tax" has a different meaning for the purposes of
constitutional law. Traditionally, a direct tax in the constitutional sense means a tax on
property "by reason of its ownership"[3] (such as an ordinary real estate property tax
imposed on the person owning the property as of January 1st of each year) as well as a
capitation (a "head tax").[4] In the late 1800s, U.S. courts also began to treat an income
tax on income from property as a direct tax.[5] In U.S. constitutional law, an "indirect tax"
or "excise" is an "event" tax. In this sense, a transfer tax (such as gift tax and estate tax)
is an indirect tax. Income taxes on income from personal services such as wages are
also indirect taxes in this sense.[6] The United States Court of Appeals for the District of

1
 2010
DIRECT TAXATION IN ZIMBABWE
Columbia Circuit has stated: "Only three taxes are definitely known to be direct: (1) a
capitation [ . . . ], (2) a tax upon real property, and (3) a tax upon personal property."[7]
In the United States, Article I, Section 9 of the Constitution requires that direct taxes
imposed by the national government be apportioned among the states on the basis of
population. After the 1895 Pollock ruling (essentially, that taxes on income from property
should be treated as direct taxes), this provision made it difficult for Congress to impose
a national income tax that applied to all forms of income until the 16th Amendment was
ratified in 1913. After the Sixteenth Amendment, no Federal income taxes are required
to be apportioned, regardless of whether they are direct taxes (taxes on income from
property) or indirect taxes (all other income taxes).[8]

CONCLUSION

Students are encouraged to research more on the topic using links provided. A case
study of Iran’s Direct Taxation is also provided as a further recommended reading for
the purpose of broadening the student’s knowledge and understanding both of the
subject and taxation law.