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1. PRESENTATION ASSIGNMENT ON TAXATION
SUBMIT BY:
NAME
OTIM FRANCIS
KALULE JOSHUA
MUKWAYA ARTHUR NOA
OKIRING JUSTIN ARTHUR APEDO
ISHUNGISA ANTHONY MUHOOZI
ORURU FRANCIS
OKEJA NATHAN
EJOKU TOM FRED
EBONG JACOB
REGISTRATION NUMER
18/U/BIO/342/GV
18/U/BIO/341/GV
18/U/BIO/340/GV
18/U/BIO/6389/PD
18/U/BIO/6435/PD
18/U/BIO/19183/PD
18/U/BIO/6401/PD
18/U/BIO/6384/PD
18/U/BIO/336/GV

2. TAXATION
Introduction to taxation

3. Meaning of taxation
• Taxation is a means by which governments finance their expenditure by
imposing charges on citizens and corporate entities. Governments use
taxation to encourage or discourage certain economic decisions. For
example, reduction in taxable personal (or household) income by the
amount paid as interest on home mortgage loans results in greater
construction activity, and generates more jobs.
A tax can be distinguished from other forms of payments in the following
ways:
• It is a compulsory levy upon business firms, groups of individuals or legal
entities. For the tax to be collected, the law on the subject must be specific
and definite to enable government collect the amount of funds it requires.

4. Other non economic reasons for taxation by
the government
To finance public goods/ services it provides the general community
such as;
• public road networks,
• health care,
• education,
• Security, etc.

5. Definition of taxes
• Dr. Dalton defined a tax as “a compulsory contribution imposed by a
public authority e.g. URA, irrespective of the exact amount of service
rendered to the taxpayer in return”.
• According to professor Seligman, a tax is “a compulsory contribution
from a person to the government to defray the expenses incurred in
the common interest of all, without reference to special benefit
conferred.”

6. characteristic/features of tax.
• It is a compulsory payment imposed by the government of the people residing in the
country. Since it is a compulsory payment, a person who refuses to pay a tax is liable for
punishment. But a tax is to be paid only by those who come under its jurisdiction.
Similarly, persons who buy a commodity which carries a tax on it, pay the tax while
others don’t.
• A tax is payment made by the taxpayers which is used by the government for the benefit
of all the citizens. The state uses the revenue collected from taxes for providing hospitals,
schools, and public utility services etc. which benefit all people.
• A tax is not levied in return for any specific service rendered by the government to the
taxpayer. An individual cannot ask for any special benefit from the state in return for the
tax paid by him. It implies that the taxpayer cannot claim something equivalent. In other
words, you cannot refuse to pay a tax on the ground that you do not use a service. A rich
man may be childless but he has to pay taxes spent on schools. Taxes are meant to cover
the general expenses of the state and are not levied for any particular purpose. Hence,
the government does not promise to perform a specific service in return for the payment
of a particular tax.

7. PRINCIPLES/CANONS OF TAXATION
• The canon of equity
• The canon of certainty
• The canon of convenience
• The canon of Economy
• The canon of productivity
• The canon of elasticity
• The canon of flexibility
• The canon of simplicity
• The canon of diversity

8. CHARACTERISTICS OF AGOOD TAX SYSTEMS
• Comprehensiveness
• A good tax system should be efficient
• Minimum burden on the tax payer
• Non cascading
• Flexible and buoyant
• Optimality
• Fairness

9. CLASSIFICATION OF TAXES
Taxes may be classified in three ways:
1. According to administrative collection arrangements, they may be
direct or indirect taxes.
2. According to rates, taxes may be progressive, proportional or
regressive depending on the rates used with respect to a given
base.
3. According to tax bases, the base of a tax is the legal description of
the objective with reference to which the tax applies e.g. the base
of rental tax is the rent received from the property.

10. 1). Tax classification according to
administrative arrangements
Direct taxes
This refers to taxes charged on the individual or firm’s income and property.
The impact and incidence of the tax burden are on the same person
Indirect taxes
These are taxes under which the impact of the tax is on one person and the
incidence is on the other person. They are paid to government by an
intermediary and the burden is passed on the consumer. The price is
inclusive of the tax.
Note: The incidence of tax is on the final resting place of a tax i.e. the point
that receives the tax burden, whereas the impact is the initial burden where
the tax falls i.e. the person on whom the tax is imposed.

11. Forms of indirect taxes
• Sales tax;
• Value added tax
• Excise duty
• Export duty
• Import tax
• Commercial transactions levy (CTL)
• Sumptuary tax:
• Octroi tax

12. Merits and Demerits of direct taxes
Merits.
• Equitable
• Certain
• Economical
• Elastic
• Simple
• Desirable
• Reduce Inequalities
• Civic consciousness
Demerits.
• Pinch
• Inconvenient
• Arbitrary
• Evasion
• Not imposed on all
• Discourage saving and
investment
• Discourage production

13. Merits and Demerits of indirect taxes
Merits
• Convenient
• Wide coverage
• Elastic
• Economical
• Diversity
• Less evasion
• Check the consumption of harmful
goods.
• Powerful tool of economic policies
Demerits
• Uncertain revenue
• Regressive
• Uneconomical
• Bad effect production and
employment.
• Feed inflation
• Lack civic consciousness

14. 2.) Classification of taxes according to rates
• Progressive taxes
This is a tax where by the marginal tax rate (liability) rises as income increases. They
always have a min-max point is the amount at which the tax rate is maximum
• Regressive tax
The average tax rate falls with the increase in income. A regressive tax system
makes lower income earners pay proportionally more than high income earners.
• Proportional tax
Tax is assessed at a uniform tax rate irrespective of the size of income. Both the
high income earners and the low income earners pay at the same rate.
• Degressive Tax
This refers to a tax whose tax rate initially increases as income increases up to a
limit beyond which the same rate is charged.

15. Merits and Demerits of progressive tax.
Merits
• Is a good measure of the ability
to pay
• Effective is reducing the income
inequalities in society
• Are more productive.
• Economical i.e. the cost of
collection
Demerits
• Discourage hard work by the tax payer
• Discourage savings and investment in
the economy
• Same amount of money does not
mean the same utility for all tax
payers
• Reduce the standards of living of tax
payers
• They are paid involuntarily
• They are vulnerable to tax evasion
• There is a smaller tax base

16. Merits and Demerits of Regressive tax.
Merits
• Difficult to evade
• Have a wider tax base than
progressive taxes
• Convenient to the tax payer
• Paid willingly and therefore little
or no dispute
Demerits
• They are paid by majority hence
reduce aggregate demand in the
economy.
• They violate the principle of
ability to pay.
• Widen the income gap between
the poor and the rich

17. Merits and Demerits of Proportional tax.
Merits
• Easy to calculate proportional
taxes than progressive taxes
• Do not discriminate against
income level hence yield more
government revenue than
progressive taxes
Demerits
• It is difficult to determine the
rate of progressiveness
especially when you can’t
measure the real sacrifice of tax
payers out of the taxes that they
pay.

18. 3a.) Tax classifications according to bases
i. Income tax; this is charged on the incomes of individuals and companies
ii. Property tax; this is tax charged on the property of an individual or an
individual’s past accumulated savings.
iii. Cooperate income tax, this is tax charged on the profits of the company.
iv. Capital gains tax; this is a tax charged on the gains made by a seller of
capital assets whose value appreciate at the time of sale. It is levied on
the increase in the monetary value of an asset between the time of
acquisition and the time of sale.
v. Death duty; this is some times called estate duty. Its tax charged on the
property of the deceased person.

19. 3b.) Tax classifications according to bases
vi. Inheritance duty: this is a tax charged on the successors of
property of the deceased.
vii. Gifts tax; this is tax imposed on gifts received by an individual.
viii.Land tax is charged on landlords.
ix. Capital tax or capital gains levy. Tax imposed on a taxpayer by the
government when there is urgent need for revenue or during
government emergency situations. (E.g. in time of war)
x. Graduated tax, this is imposed on the property of an individual
adult by the ministry of local government.

20. 3c.) Tax classifications according to bases
xi. P.A.Y.E this is tax charged on salaries and wages of workers.
xii. Super profits tax, is imposed on a certain percentage of the paid up
capital of a company. The greater the amount of paid up capital,
the smaller the amount of super profits tax paid imposed on the
value of agricultural produce realized as income by the farmers,
after due allowances are made for expenses and costs of
production .
xiii.Poll tax, a fixed amount levied on every member of the “male”
adult population regardless of income earned by the taxpayer.