The word tax is based on the Latin word “taxo” which means to estimate. To tax means to impose a financial charge or other levy upon a taxpayer, an individual or legal entity, by a state or the functional equivalent of a state such that failure to pay is punishable by law.

In ancient times, taxes were either financial or material in the form of products or services. The Head of a tribe or the King used to get a portion of the subjects’ revenue in exchange for providing them with the administration’s security against outside aggression and other civic amenities..
The foundation of the contemporary tax system was laid throughout the medieval eras, along with the foundation of feudalism. With the growth of the money economy, feudal market dues, tolls for the protection and use of roads, bridges, and ferries, land rent, and other payments in goods and services were gradually replaced by payments made in money. Kings liked to receive money, and people preferred to make payments in money rather than in goods and services. The ancient feudal income structure gradually gave way to taxation.

Then, as the field of economics advanced and time went on, the functions of the modern state began to take shape, and taxes gradually developed into a tool with several uses and a significant source of income. The public expenditures have changed both qualitatively and quantitatively during the 19th and 20th centuries. Since the goals and stages of taxation have changed over time from the ancient communities to the medieval societies to the modern societies, the tax system has evolved along with the development of the functions of the modern state..
Taxes are sums of money that people pay that are not directly related to the benefits that people receive from the provision of specific goods or services. They are levied by the government and collected from natural persons or legal entities..

CHARACTERISTICS OF TAXES

1. Tax is compulsory – The law imposes taxes. Taxes are therefore payments that citizens must make to their governments. Every person has a responsibility to pay his fair share of taxes to support the government. Taxes must be paid in full; failing to do so results in punishment or is considered a criminal offense by the courts. When someone purchases goods, utilizes services, earns income, or any other condition of compulsion is discovered, the government applies tax. When collecting taxes from its inhabitants, the government exercises its sovereign authority.

2. Tax is contribution – To contribute is to assist or offer anything. Taxes are community contributions made to the government. Every citizen has a responsibility to pay their fair share of taxes to support the government and assist it in covering its expenses. Some desires, like defense and security, are shared by every member of the society, therefore individuals cannot satisfy these desires. Governments provide these societal needs, hence people support government to fulfill these needs. Contribution entails sacrifice or loss on the part of the contributor. His income is impacted by these sacrifices.
3. Tax is for public benefit – Taxes are collected for the benefit of society as a whole, not to benefit any particular person in particular. Government revenue is used to provide services that benefit all citizens equally, including relief from natural disasters like floods and famine, national defense, the upkeep of the law, and the establishment of infrastructure and order. All people are eligible for such rewards..
4. No direct benefit – All taxes are required to be paid, and the government does not directly reward tax payers for their contributions. The absence of a direct quid pro quo between the taxpayer and the public authority distinguishes taxes from other levies made by governments. Taxes are distinct from other types of government taxes and levies that may provide direct benefits to payers, such as pricing, fees, fines, etc. All members of society receive common benefits through taxes.
5. Tax is paid out of income of the tax payer –Income is defined as money received for employment or from investments, especially on a regular basis. As long as the revenue is recognized in this case, the tax must be paid out of it. Any business owner who makes money should give the government his fair share as support.
6. Government has the power to levy tax – Through the collection of taxes, governments exercise sovereign control over their constituents. People’s taxes can only be collected by the government. Resources are being moved from the private to the public sectors through taxes. The tax is being levied by the government to pay for its expenses. The government uses these taxes to promote economic growth and social welfare..
7. Tax is not the cost of the benefit – Taxes do not represent the price of the benefits that the state provides to the populace. Benefit and taxpayer are independent of one another, and the purpose of paying taxes is of course to provide benefits to the broader public..
8. Tax is for the economic growth and public welfare – Maximizing social welfare and economic prosperity is a key government goal. The two processes that make up a nation’s development are often raising money and spending it, thus the government uses tax money to improve the economy, the community, and society as a whole.