What Is Taxation?

Taxation refers to the compulsory levies imposed by governments on their citizens. These levies have existed since ancient times, serving as a fundamental mechanism to fund public services and infrastructure. They encompass various types, such as income, capital gains, and estate taxes.

While “taxation” can be a noun or verb, it primarily denotes the act of imposing these financial obligations, with the objective of generating revenue for governmental expenditure.

Types of Taxation

Taxation differs from other payments, like market exchanges, as it does not require consent and isn’t directly linked to services provided. Governments enforce taxation through either implied or direct threats of force. Taxation is legally different than extortion or a protection racket because the imposing institution is a government, not private actors.