Tax is a burden. Most people would agree to that statement. However, tax is implemented for certain purposes. The four purposes of taxes include revenue, redistribution, repricing and representation.

Tax is collected for government’s revenue. The taxes raised are used for different government functions such as building infrastructures, government buildings and public institutions and other government projects. Government funding can also be taken from taxes collected.

The purpose of tax collecting for redistribution is often considered to be controversial. Tax can be imposed by a government to the richer section of the society for equal distribution to the poorer sections. This concept is widely accepted in democratic countries.

Repricing is another purpose of taxation. Taxes are levied on items that are considered to be bad or luxurious or with extremities. A carbon tax is a kind of tax imposed to energy sources that emit carbon dioxide. There is also a tax imposed on tobacco products.

Representation is another purpose of taxation. This means that the rulers impose tax on its citizens or those that belong on their jurisdictions. Citizens, on the other hand, can demand accountability from their governments or those who rule them.

Direct tax and indirect tax are two classifications in a tax system. A direct tax is a kind of tax directly imposed to a taxpayer. A taxpayer can be an individual or business entity. Income taxes, transfer taxes and some corporate taxes are examples of direct taxes. Filing of tax returns and paying tax liabilities can directly be made by taxpayers.

A contrast to direct tax is indirect tax which pertains to taxes that are collected by intermediaries. Sales tax and value added tax are kinds of indirect tax. 

Filing of tax returns can be made with the help of accountants, tax advisors or tax filers. Individuals can also file their tax returns with the use of tax software programs.

Taxes can be of different types.  They include environment affecting tax, capital gains tax, consumption tax, corporation tax, excises, inheritance tax, poll tax, sales tax, tariffs, retirement tax, property tax, value added tax, toll, transfer tax, wealth tax and income tax.

The most common type of tax is the income tax. Income tax is levied against the financial earnings of individuals, corporations and other legal entities. The income tax rates may vary from country to country.

Taxes can be imposed on properties, sale of goods, for the use of roads and bridges and for importing of goods. Taxes can be imposed on resources that can bring possible ill-effects. There are also taxes imposed on properties that are distributed to heirs. Gift tax may be imposed to recipients of a gift.

The tax rates on each type of tax may vary considerably. Each country may have its own tax laws and can impose taxes on certain goods, services, transactions, properties and to the income and gains of taxpayers.

There have been many arguments on the implementation of a tax system of a country particularly in democratic countries. Nevertheless, there are countries that have pushed through their taxation systems and have created enforceable tax laws. Countries such as the United States have strict tax laws. Even those that are non-resident citizens may still be liable for American tax system.

Meanwhile, there are countries which have lenient tax laws. Countries that impose lower tax rates to their taxpayers are called tax havens. These countries are very attractive to individuals who practice tax avoidance because of having lower or zero taxes. Businesses can also benefit from tax havens where they can potentially accumulate earning by paying small business tax rates or none at all. There are tax havens that are also known as off-shoring destinations of foreign companies.  Switzerland, Monaco and the Bahamas are popular tax havens.

Tax is a kind of burden to many individuals. Although it is legal for a taxpayer to practice tax avoidance, evading tax payment is an illegal act.  Tax evading in countries with enforceable tax law is a serious criminal offense.