Tax is money that individuals and businesses pay to the government to help fund public services like education, healthcare, and transportation.
Why do we pay tax?
The payment of taxes is fundamental to sustaining societal functions. Through taxation, citizens gain access to free primary education and healthcare services, ensuring that these vital benefits are universally available. In essence, the taxes we pay directly contribute to the well-being of society as a whole.
Moreover, taxation plays a pivotal role in mitigating economic disparities among citizens. A progressive tax system ensures that those with higher incomes contribute proportionately more to public finances than those with lower incomes. This mechanism fosters a fair distribution of the financial burden and promotes a more equitable society.
Direct tax and indirect tax
We often distinguish between direct tax and indirect tax.
Direct taxes are imposed on individuals and corporations, while indirect taxes are levied on goods and services. Examples of direct taxes include income tax and corporate tax.