TAXATION

Tax – A fee charged ("levied") by a government on a product, income, or activity. If tax

is levied directly on personal or corporate income, then it is a direct tax. If tax is
levied on the price of a good or service, then it is called an indirect tax. 
Taxation:

 The act of laying a tax, or of imposing taxes, as on the subjectsof a state, by government, or o
n the members of a corporation orcompany, by the proper authority; the raising of revenue; al
so, a systemof raising revenue. 
 the imposition of taxes; the practice of the government inlevying taxes on the subjects of a st
ate.

Purpose of Taxation: The purpose oftaxationis tofinancegovernment expenditure.

Uses of Taxation: One of the most importantusesoftaxesis to financepublic goodsand

services, such asstreetlighting and street cleaning. Since public goods and services do
not allow a non-payer to be excluded, or allowexclusionby aconsumer, there cannot
be amarketin the good or service, and so theyneedto be provided by the government
or a quasi-governmentagency, which tend to finance themselves largely through
taxes.