TeamMany civilians are unaware of the importance of taxes. However, taxes are resources that make our dream of civil societies possible. They are payments we pay to the government for our security, greater infrastructures around us, and all the other facilities like education, parks, and other amenities that make our lives better, safe, and fun.
Taxes are also used in protecting the environment, national defense, explorations, and other privileges we get as being part of society. Following are some common types of taxes we as citizens are paying and you should know about.
Income Tax
This is the most common type of tax. In this system, individuals pay taxes according to their income. There is a certain limit set by the judiciary, under that income an individual doesn’t have to pay any tax. But anyone above that has to pay the tax.
Property Tax
All the property one owns is first identified and justified by the law. Certain documentation legitimizes the buyer’s ownership and then no one can occupy or forcefully take hold of the property. So, in civilized society government ensures the protection of your liabilities, and you are always secure without having to constantly watch over or protect the property by force.
This security comes at a cost that you pay as property tax. This includes your house, any other portion of the land, any vehicles or boats, etc you own.
Wealth Tax
Wealth tax is a direct tax. This is the type of tax applied to a person’s net worth. It is assets minus liabilities. This tax however is not applied in all countries. Some countries give exemption and only charges tax for liabilities like properly or whatsoever vehicles, villas, buildings, or businesses you own. But in some countries, wealth tax applies to all the taxes including those mentioned above.
Corporate Tax
These are taxes applied to businesses. The best part about this tax is that it lets the corporation minus out of all the revenue generated that is to spend on goods, salaries, and maintenance. So, a company does not have to pay per the total revenue generated. Rather it excludes all the expenses company has to bear and investing back in the maintenance of the business.
Excise Tax
This is a manufacturing tax. It is a type of tax applied to specific goods like alcohol. Most businesses pay these taxes without the direct involvement of consumers. So, These taxes are not necessarily direct and are already paid by the merchant and then he sells those goods in the form of higher prices. However, when the businesses pay direct taxes, these are not included in that list. And the manufacturer has to pay them separately.
GST Tax
Unlike Excise tax that applies to the manufacturing of goods, GST has applied to the delivery of goods. This is an indirect type of tax and the consumers pay it for the marketing and delivery services that the company makes available to the citizens via delivering it to stores, malls, and all the places we they form.
Security Transaction Tax
This tax is applicable on sale/purchase transactions done through the stock exchanges. The tax applies to the sale or purchase of different financial products like derivatives, mutual funds, and stocks, etc.
Custom Duty Tax
This is the tax imposed on the import of the imported goods by either individual or large businesses. The amount of tax applied depends on the quality of goods. Also, it varies from country to country and nature of origin and manufacturing of the product.
But, this is not applied to all the countries. Various countries have free import trades signed with the government so when things import from that country, it does not apply custom duty to those goods.
Service Tax
This is the tax we pay for different services and facilities we get. For example, if your children were going to a school that did not have an AC will cost you more fee if they got an AC later. Similarly, different restaurants charge extra money for the unique services they give. That’s what makes certain places more expensive than others.
Let’s say you go to a motel which has a room and bed to sleep in. It will charge you less money than staying at one that provides more services like a bigger room, private waiter, hot shower, or in the room delivery, etc. Even having a room with a balcony will cost more money because it is a greater service in comparison.
