The article gives a detailed analysis of Classification and Types of Taxes.
Proportional tax, Progressive tax, & Regressive tax
Taxes may be further classified on the basis of their relationship between tax rate and level of income which is the basis of tax rate. The main characteristic feature of tax is the rate of tax burden because it is the determinant of the taxable capacity of a person. These forms of taxes show the basis of relationship between the changes in the tax rate.
A Progressive tax is a positive tax as in it the rate of tax increases with the increase in the level of income. In it higher burden of tax is on rich and less burden of tax on the poor. There progressive tax helps in reducing inequality in the level of income in the hands of rich and the poor. On the other hand regressive tax is a negative tax as in it rate of tax decreases as the tax base increases.
In this there is equal burden of tax on the rich and the poor. Proportional tax is a tax in which tax rate remains constant. In it the rate of tax has a direct relation with the change in the level of income. Such taxes are applicable on any form of taxes.
A property tax is a tax which is levied on property owned by an individual. The amount of tax charged is based on the value of the property of an individual which is charged on yearly basis. The most popularly known property tax is a tax on the real estate on which tax is charged annually. There are two types of property tax commonly known which are known as inheritance tax which is levied usually whenever a person acquires the property of the deceased and the other is known as stamp duty which is imposed whenever there is transfer of ownership.
An excise tax is a tax on the production or manufacture of goods. It is an indirect tax and is imposed on manufacture of goods and not on the sale of goods which means it is not concerned with the value of goods but on the number of goods produced. For example, fuel excise may be used for providing transportation facilities to public which is provided in the form of roads, and by way of bridges. Excise may also be used to develop the pattern of consumption .For example in order to reduce the intake of alcohol high excise may be imposed.
Sales tax is another form of excise tax which is imposed at the time of sale of goods to the ultimate consumer. In the view of retailing society the imposition of such sales tax dampen relative sales. Such sales tax may be of progressive or regressive nature. People with large earning capacity spend only a low proportion of their income and hence the rate of sales tax shall be of regressive nature.
As a result there off food, items of utilities and necessities are exempted from sales tax because of the fact that a high proportion of poor society spends a major part of their income in such products which makes the tax of progressive nature.
A toll is an imposition of tax for services rendered relating to traveling. It is basically fee charged for traveling through roads, bridges, tunnels and all means through which traveling becomes possible. Taxes are also been imposed on transport services which are privately offered. Toll is charged on distances covering large area and it is a fixed amount which comes in force because of use of vehicles.
Tariffs may be levied at the time of import or at the time of export. It is also known as custom duty or it may be called as impost. It is charged on goods which cross the custom frontiers of India. Tariffs dampen trade. A part of revenue received by way of tariffs is hypothecated in paying to the government with a view of maintaining a navy and also for maintaining of border police.
There are many other forms of taxes imposed by the government which may be in the form of value added tax (VAT), survey Tax, legacy Tax, Transmit Tax, Retreat Tax, and capital which includes a never ending list of taxes.