tax

a levy imposed by the government on GOODS and SERVICES (INDIRECT TAX) and the INCOME and WEALTH of persons and businesses (DIRECT TAX). The government uses taxes for a number of purposes such as:

to raise revenue to finance government spending (see BUDGET);
to promote social equity by redistributing income and wealth (see DISTRIBUTION OF INCOME);
to regulate the level of total spending in the economy (see FISCAL POLICY);
to protect domestic producers from imports (see TARIFF). See INCOME TAX, CORPORATION TAX, CAPITAL GAINS TAX, WEALTH TAX, INHERITANCE TAX, VALUE-ADDED TAX, CUSTOMS DUTY, EXCISE DUTY.

tax

a levy imposed by the government on the income, wealth and capital gains of persons and businesses (DIRECT TAX), on spending on goods and services (INDIRECT TAX), and on properties. In the UK, taxes on income include personal INCOME TAX and CORPORATION TAX; ‘inheritance tax’ is used to tax wealth (see WEALTH TAX) and CAPITAL GAINS TAX is used to tax ‘windfall’ profits; taxes on spending include VALUE-ADDED TAX, EXCISE DUTY and TARIFFS; taxes on properties include the council tax (see LOCAL TAX) and the UNIFORM BUSINESS RATE. Such taxes are used to raise revenue for the government and as a means of controlling the level and distribution of spending in the economy. See TAXATION, PUBLIC FINANCE.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

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