Introduction to Taxation

This chapter summarises the concepts, practices and experiences in taxation history, theory, law and administration covered in this book. It reviews the market behaviour of consumers and producers prior to the introduction of a tax and how a market equilibrium is achieved. It addresses what happens to the pre-tax equilibrium when a tax is introduced, and its impact on that market and on the economy as a whole. It provides reasons why governments impose taxes and what principles should be adhered to when structuring a tax system. It addresses the area of tax legislation regarding how a country’s constitution assigns taxes to different levels—central, state, local—of government, and how the language of tax law should be formulated, and by which professional branch. It addresses the structures and experiences with a comprehensive list of globally prevalent taxes—both direct and indirect—on consumption, production and forms of income. It continues to an issue in international taxation that has recently emerged in the form of challenges to adequately tax multinational enterprises. It addresses how tax administration should be structured in all its aspects and provides country experiences. Finally, in a nutshell, it recounts what should comprise an ideal tax design.