Chapter 3: The

Classification of Taxes
International Leadership University- Burundi
Lecturer: Patrick Rumeci
UCC 213: Principles of Taxation
Academic Year: 2021-2022
 CLASSIFICATION
Administrative collection arrangements.
Bases.
Rates
Effects.

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 ADMINISTRATIVE COLLECTION
ARRANGEMENTS
Direct payments= tax payer clearly identified (E.g.:
Individual taxes on income).
Indirect payments= tax payer not clearly identified
(E.g.: Sales taxes).
Direct taxes vs. indirect taxes.

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 TAX BASES
Base= legal description of the object for taxation (E.g.:
base of an income tax= income of the assessee defined
and estimated in terms of certain rules laid down for
this purpose).
Used to determine the tax liability of an individual tax
payer (Considered as a legal entity).

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 RATES
Progressive tax= rate increases in stages.
Proportional tax= rate remains the same.
Regressive tax= rate decreases in stages.
Digressive tax= admixture of progressive and
proportional tax.

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RATES-ILLUSTRATION

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 PROGRESSIVE TAXATION-ARGUMENTS
Ability-to-pay.
Social justice.
Savings and capital formulation.
Economic stability.

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PROPORTIONAL TAXATION-ARGUMENTS
Administrative simplicity.
Neutrality.

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 EFFECTS
No escape vs. escape.
No loss of revenue vs. loss of revenue.
Through the process of exchange vs. through the
process of production.
Forward shifting vs. backward shifting.

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 EFFECTS (Continued)
Transformation.
Avoidance vs. evasion.
Through legal devices vs. through deterioration.
False declaration of income.

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 EFFECTS-DIAGRAM
IMPOSITION OF TAX

NO ESCAPE ESCAPE

NO LOSS OF LOSS OF
REVENUE REVENUE

THROUGH
THE PROCESS
THROUGH THE
PROCESS OF
AVOIDA EVASIO
OF EXCHANGE PRODUCTION NCE N

FORWARD BACKWAR TRANSFO THROUGH THROUGH

FALSE
DECLARATION
LEGAL DETERIORATI
SHIFTING D SHIFTING ON
DEVICES

RMATION OF INCOME

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