Introduction of tax

Some Important Words

1. Fiscal = Money
2. Assessee = The person who pay tax
3. Assessment = Is the procedure to pay tax
4. Fiscal year = Economy year
5. Starte from 1^st July and ended 30 June of the next year
6. Income year = The earning year of the Assessee
7. Assessment year = Tax paying year
8. Tax = Is the mandatory payment to the Government for living civilization without expecting of any direct return
9. Income = Income includes earn from whatever sources
10. Return = Return is a form by which assessee submit his income and expenses to the income tax authority
11. Circle = circle is the specified area for collecting/ assess tax
12. T.I.N = Tax Identification Number
13. T.C.C = Tax Clearance Certificate
14. N.B.R = National Board of Revenue
15. Tax Holiday = Some new established Industries are getting Tax Holiday facility for a specified time

Brief  historical background of Tax

GREAT BRITAIN
The first tax assessed in England was during occupation by the Roman Empire.
Lady Godiva
Lady Godiva was an Anglo-Saxon woman who lived in England during the 11th century. According to legend, Lady Godiva's husband Leofric, Earl of Mercia, promised to reduce the high taxes he levied on the residents of Coventry when she agreed to ride naked through the streets of the town.
When Rome fell, the Saxon kings imposed taxes, referred to as Danegeld, on land and property. The kings also imposed substantial customs duties.
The 100 years War (the conflict between England and France) began in 1337 and ended in 1453. One of the key factors that renewed fighting in 1369 was the rebellion of the nobles of Aquitaine over the oppressive tax policies of Edward, The Black Prince.
Taxes during 14th century were very progressive; The 1377 Poll tax noted that the tax on the Duke of Lancaster was 520 times the tax on the common peasant.
Under the earliest taxing schemes an income tax was imposed on the wealthy, office holders, and the clergy. A tax on movable property was imposed on merchants. The poor paid little or no taxes.
Charles I was ultimately charged with treason and beheaded. However, his problems with Parliament came about because of a disagreement in 1629 about the rights of taxation afforded the King and the rights of taxation afforded the Parliament.
The King's Writ stated that individuals should be taxed according to status and means. Hence the idea of a progressive tax on those with the ability to pay was developed very early.
Other prominent taxes imposed during this period were taxes on land and various excise taxes. To pay for the army commanded by Oliver Cromwell, Parliament, in 1643, imposed excise taxes on essential commodities (grain, meat, etc.). The taxes imposed by Parliament extracted even more funds than taxes imposed by Charles I, especially from the poor. The excise tax was very regressive, increasing the tax on the poor so much that the Smithfield riots occurred in 1647. The riots occurred because the new taxes lowered rural laborers ability to buy wheat to the point where a family of four would starve. In addition to the excise tax, the common lands used for hunting by the peasant class were enclosed and peasant hunting was banned (hooray for Robin Hood).
A precursor to the modern income tax we know today was invented by the British in 1800 to finance their engagement in the war with Napoleon.  The tax was repealed in 1816 and opponents of the tax, who thought it should only be used to finance wars, wanted all records of the tax destroyed along with its repeal.  Records were publicly burned by the Chancellor of the Exchequer but copies were retained in the basement of the tax court.
ROMAN EMPIRE
The earliest taxes in Rome were customs duties on imports and exports called portoria.¹
Caesar Augustus was consider by many to be the most brilliant tax strategist of the Roman Empire.  During his reign as "First Citizen" the publicani were virtually eliminated as tax collectors for the central government.  During this period cities were given the responsibility for collecting taxes.  Caesar Augustus instituted an inheritance tax to provide retirement funds for the military.  The tax was 5 percent on all inheritances except gifts to children and spouses.   The English and Dutch referred to the inheritance tax of Augustus in developing their own inheritance taxes.
During the time of Julius Caesar a 1 percent sales tax was imposed.  During the time of Caesar Augustus the sales tax was 4 percent for slaves and 1 percent for everything else.¹
Saint Matthew was a publican (tax collector) from Capernaum during Caesar Augustus reign.  He was not of the old publicani but hired by the local government to collect taxes.
In 60 A.D. Boadicea, queen of East Anglia led a revolt that can be attributed to corrupt tax collectors in the British Isles.  Her revolt allegedly killed all Roman soldiers within 100 miles; seized London; and it is said that over 80,000 people were killed during the revolt.  The Queen was able to raise an army of 230,000.  The revolt was crushed by Emperor Nero and resulted in the appointment of new administrators for the British Isles.


GREECE
In times of war the Athenians imposed a tax referred to as eisphora.   No one was exempt from the tax which was used to pay for special wartime expenditures.  The Greeks are one of the few societies that were able to rescind the tax once the emergency was over.  When additional resources were gained by the war effort the resources were used to refund the tax.
Athenians imposed a monthly poll tax on foreigners, people who did not have both an Athenian Mother and Father, of one drachma for men and a half drachma for women.  The tax was referred to as metoikion

A tax to beat Napoleon
Income Tax was announced in 1798, and introduced in 1799, as a means of paying for the war against the French forces under Napoleon. France was threatening to invade, and had already landed briefly in Wales and Ireland. For much of his campaigns from 1795, Napoleon was better organised than the British forces. The cost of war had drained Britain’s resources, and run up a considerable national debt. The army was starving, and poor conditions in the navy in 1797 had led to mutiny.
William Pitt the Younger was Prime Minister and Chancellor of the Exchequer from 1783, and needed greater ‘aid and contribution for the prosecution of the war’.
‘Certain duties upon income’ as outlined in the Act of 1799 were to be the (temporary) solution. It was a tax to beat Napoleon. Income tax was to be applied in Great Britain (but not Ireland) at a rate of 10% on the total income of the taxpayer from all sources above £60, with reductions on income up to £200.
It was to be paid in six equal instalments from June 1799, with an expected return of £10 million in its first year. It actually realised less than £6 million, but the money was vital and a precedent had been set.
In 1802 Pitt resigned as Prime Minister over the question of the emancipation of Irish catholics, and was replaced by Henry Addington. A short-lived peace treaty with Napoleon allowed Addington to repeal income tax. However, renewed fighting led to Addington’s 1803 Act which set the pattern for income tax today.
Significant change
Addington’s Act for a ‘contribution of the profits arising from property, professions, trades and offices’ (the words ‘income tax’ were deliberately avoided) introduced two significant changes:

• Taxation at source - the Bank of England deducting income tax when paying interest to holders of gilts, for example
• The division of income taxes into five ‘Schedules’ - A (income from land and buildings), B (farming profits), C (public annuities), D (self-employment and other items not covered by A, B, C or E) and E (salaries, annuities and pensions).

Although Addington’s rate of tax was half that of Pitt’s, the changes ensured that revenue to the Exchequer rose by half and the number of taxpayers doubled. In 1806 the rate returned to the original 10%.
Pitt in opposition had argued against Addington’s innovations: he adopted them almost unchanged, however, on his return to office in 1805. Income tax changed little under various Chancellors, contributing to the war effort up to the Battle of Waterloo in 1815.
Nicholas Vansittart was Chancellor when Napoleon was defeated. His inclination was to maintain some tax on income, but public sentiment and the opposition were against him. A year after Waterloo, income tax was repealed ‘with a thundering peal of applause’ and Parliament decided that all documents connected with it should be collected, cut into pieces and pulped.
The critics of income tax had won the day, but experience had proved that it was a practical means of raising revenue, that it could be applied fairly, and that concerns about invasion of privacy were largely misplaced. The critics were also frustrated in the destruction of the records, unaware that duplicates had already been sent to the King’s Remembrancer.
Income Tax
The mid-1800s saw the beginnings of significant social and economic change. With the Whigs (forerunners of the Liberals) in power from 1830, child labour was limited, slavery in the Empire ended, and Parliamentary reform gave representation to cities including Manchester and Liverpool, and to more of the middle classes. Railways transformed communications within England and linked Scotland, Wales and - via Holyhead - Ireland. The potato famine in Ireland began in the mid-1840s.
The general election of 1841 was won by the Conservatives with Sir Robert Peel as Prime Minister. Although he had opposed income tax, an empty Exchequer and a growing deficit gave rise to the surprise return of the tax in his 1842 Budget. Peel sought only to tax those with incomes above £150, and he reduced customs duties on 750 articles out of a total number taxed of 1,200. The less wealthy benefited, and trade revived as a consequence.
Peel's income tax was imposed for three years, with the possibility of a two year extension. A funding crisis in the railways and increasing national expenditure ensured that it was maintained. For Peel, the debate was academic. In 1846 he repealed the Corn Laws - which supported farmers by inflating the price of corn when cheaper imports were available - and lost the support of much of his party. The Whigs resumed power the same year to be joined by some notable 'Peelites'.
A 'temporary' tax
Income tax is still a 'temporary' tax - it expires each year on 5 April and Parliament has to reapply it by an annual Finance Act. For up to four months until the Finance Act becomes law, the Provisional Collection of Taxes Act 1913 ensures that taxes can still be demanded.
From the introduction of income tax, Government-appointed Commissioners - usually the landed gentry - were responsible for administering and collecting taxes with Surveyors having a watching brief. This pattern is essentially the same today. Surveyors have since been renamed Inspectors, however, and now have total responsibility for assessment and collection whereas Commissioners resolve disputes but have no executive duties.
In 1833 the Board of Taxes and the Board of Stamps (controlling duties paid on documents on which house transactions, for example, are recorded) were combined in the Board of Stamps and Taxes, and in 1849 the Board of Excise was added to create the new Board of Inland Revenue.The Excise Department moved from the Inland Revenue to the Board of Customs in 1909. HM Customs & Excise and the Inland Revenue were re-united in 2005 to form HM Revenue & Customs
Attempts to make tax easier
with income tax now accepted as a necessary part of life, attempts were made to clarify it.

• The Income Tax Act of 1918 consolidated all income tax legislation into one volume, one of the Law Lords commenting of previous legislation ‘no censure could be too strong, I think, for having expressed an Act... in language so involved, so slovenly and so unintelligible as is the language of the Acts of 1842 and 1853’. The language stayed in the consolidated version, however, having proved impossible to change.
• A Royal Commission was set up in 1920 ‘to enquire into the income tax (including super-tax)’ in all its aspects. After 50 sittings and the examination of 200 witnesses, the 100,000 word report proposed changes in detail, but concluded that ‘as it was in 1842, so in its essential features should it remain’. Although the value of Peel’s 1842 legislation was noted, the real credit is to Addington’s Act of 1803.
• In 1927 Chancellor Winston Churchill set up the Income Tax Codification Committee to condense the 800 provisions of 19 different Acts, and the decisions of 1,800 court cases, into a single code. It reported in 1936, but - with the Second World War intervening - was not considered in detail until 1952. By then a further fifteen Finance Acts had been passed, and there were a further six volumes of reported cases to consider. Despite some revolutionary proposals, the attempt had failed.

Pay As You Earn
The growing number of taxpayers during the war led to the need for a more efficient tax collection system, and Pay As You Earn - PAYE - was introduced in 1944 as a result.
In place of annual or twice-yearly collections, tax was deducted by employers from wages weekly or monthly and an employee leaving work was given a P45 recording his or her code number, pay to date and tax paid to date to pass on to a new employer.
The British scheme had been piloted by Churchill’s Chancellor Sir Kingsley Wood from 1940-41. On the day it was to be announced, Wood collapsed and died. But by the end of January 1944, fifteen million people - anyone earning £100 a year or more - had received notices telling them their code number. In the Inland Revenue’s first exercise in public relations, staff visited work places to discuss the system with employers and employees.

TAX

Tax is the mandatory payment to the Government for living civilization without expecting of any direct return.

Definition

The term 'tax' has been derived from the French word taxe and etymologically, the Latin word taxare is related to the term 'tax', which means 'to charge'. Tax is 'a contribution exacted by the state'. It is a nonpenal but compulsory and unrequited transfer of resources from the private to the public sector, levied on the basis of predetermined criteria.

Tax is a payment to a public authority, required by statute, for a public purpose. Or

A compulsory contribution to state revenue levied by the government on workers' income and business profits or added to the cost of some goods, services, and transactions. Or

A contribution made by people to fund the services provided by the government, such as transport, education or health services.
The most common tax is income tax, which is a contribution made from income. The amount is usually a percentage of income that is determined by the amount of income earned.

According to Article 152(1) of the Constitution of Bangladesh, taxation includes the imposition of any tax, rate, duty or impost, whether general, local or special, and tax shall be construed accordingly. Rate is a local tax imposed by local government on its residents or the property owners of the locality, a duty is a tax levied on a commodity, and an impost is a tax imposed for an entry into a country. Under the provision of article 83 of the Constitution, "no tax shall be levied or collected except by or under the authority of an Act of Parliament". The imposition, regulation, alteration, remission or repeal of any tax is dealt with by the 'Money Bill', but except in case of reduction or abolition of any tax, the 'Money Bill' cannot be introduced in the Parliament without the President's recommendation.

In General: Tax is a compulsory levy for the people which is payable to the government for civilization without expectation of any direct return.

Definition by Taylor: Taxes are compulsory payments to government without expectation of direct return in benefit to the tax payer.

By Justice Homes: Taxes are compulsory payment to the state for living civilization.

John Bouvier defined a tax as:
"A pecuniary burden imposed for the support of the government.The enforced proportional contribution of persons and property levied by the authority of the state for the support of the government and for all public needs."
In Lower Mainland, the Privy Council, Justice Thankerton for the Court, wrote that taxes:
"... are compulsorily imposed by a statutory (authority)...
"They are enforceable by law... (and) compulsion is an essential feature of taxation."

In Canada, an oft-cited definition is that of Justice Duff of the Supreme Court in Lawson:
"That they are taxes, I have no doubt. In the first place they are enforceable by law.... Then they are imposed under the authority of the legislature. They are imposed by a public body.... The levy is also made for a public purpose."

According to Section 2(62) Income Tax Ordinance 1984

“Tax means the Income Tax payable under ordinance and includes any additional tax, access profit tax then penalty, interest, fee or other charges levible or payable.

Tax Quotation

James Madison
I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents...

Will Rogers
It is a good thing that we do not get as much government as we pay for.

Arthur Godfrey
I am proud to be paying taxes in the United States. The only thing is I could be just as proud for half of the money.

John Maynard Keynes
The avoidance of taxes is the only intellectual pursuit that carries any reward.

Winston Churchill
There is no such thing as a good tax.

Plato
When there is an income tax, the just man will pay more and the unjust less on the same amount of income.

Albert Einstein
The hardest thing in the world to understand is the income tax.

Ronald Reagan
The taxpayer: that's someone who works for the federal government, but doesn't have to take a civil service examination.

Winston Churchill
We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.

Calvin Coolidge
Collecting more taxes than is absolutely necessary is legalized robbery.

Characteristics of Tax

a.       Paid by people

b.      Paid to the Government

c.       Mandatory

Kinds of Tax

a)      Income tax = Income tax depends on income. Person who earn he/she pay tax.

b)      Wealth Tax = The person who hold some wealth he has to pay tax.

c)      Gift Tax = A tax on the donor of gifts made during his or her life, based on the right to transfer or transmit, and payable primarily by the donor.

d)      Inheritance Tax/ death Tax =  A tax imposed on the privilege of receiving property by inheritance or legal succession and assessed on the value of the property received. Also called death tax.

e)      Municipal Tax / City Corporation Tax

f)        Import/ Export Tax

g)      Sale Tax

h)      V.A.T (value added tax) = a percentage tax on the value added of a commodity or service as each constituent stage of its production and distribution is completed. VAT may be classified in three ways: (i) on the basis of coverage of stages - throughout the production and distribution stages, or confined to limited stages - manufacturing plus wholesale, or wholesale plus retail; (ii) on the basis of the method of calculation - tax credit method, subtraction method, and addition method; and (iii) on the basis of tax treatment of final-product capital goods such as machinery, equipment, and supplies - the consumption form, the income form, and the product variety. Thus the three broad types of VAT are the gross national product (GNP) type, income type and consumption type. A consumption type VAT is an indirect tax. An income type or a GNP type VAT might be considered as a direct tax but a commodity tax cannot be considered so. Consumption type VAT is also considered as an alternative form of 'sales tax'.

The objectives behind introducing VAT in Bangladesh were to (a) bring transparency in the taxation system; (b) prohibit cascading taxation at different stages of production; (c) consolidate the tax administration; (d) activate the overall economy by mobilising more internal resources; and (e) bring a consistency in the tax-GDP ratio.

VAT introduced in Bangladesh in its initial form was a sort of consumption tax (by allowing purchase of capital goods as input), which extended its coverage up to the level of import, production or manufacture and service-rendering but not to export (which is zero-rated), wholesale or retail level. Since the financial year 1996-97, VAT in Bangladesh has become a broad-based consumption expenditure tax by covering the wholesale and retail levels. VAT is imposed on the following goods and services: all goods imported in Bangladesh except those mentioned in the First Schedule of the VAT Act; all goods supplied except those mentioned in the First Schedule of the VAT Act; and all services provided in Bangladesh except those mentioned in the Second Schedule of the VAT Act.

i)        Land Revenue