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CH 1 Overview of Taxation
CH 1 Overview of Taxation
OVERVIEW OF
TAXATION
SISAY MULATE (PHD) 2
What is taxation?
• Taxation is a system of raising revenue by a
government through tax.
• It is a method of collecting funds by a
government from tax sources to finance its
operation.
10. Principle of Productivity- the tax system should be productive enough i.e.
– it should encourage productive activity by encouraging the people to work, save and invest.
• The term “flat tax” is one where the tax amount is fixed as
a function of income and is a term mainly used in the
context of income taxes.
• Inequitable
• Not reduce inequalities
• Not elastic
• Bad effect on the economy
The tax avoidance can be defined as “escaping from the tax liability by using the
available loop-holes of the tax laws”.
Divorcing the wife on paper so that her income is not added together with
husband’s income is also a common device for tax avoidance.
Suppose a taxpayer’s total income exceeds the maximum tax-free amount, then
he has to pay the tax on such excess amount. But if he invests the excess amount in
any of the approved schemes for which there is a relief in the tax law, he can save on
tax altogether.
THANKYOU!!!
4/23/201
Sisay Mulate (PhD) 23
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