(1) Tax:
Definition and
Explanation of Tax:
A tax is a compulsory
contribution to the public authority to
cover the cost of services rendered by state for the general benefit of its
people. In the words of Plehn:
"Taxes are generally compulsory contributions of
wealth levied upon persons, natural or corporate to defray the expense incurred
in conferring a common benefit upon the residents of the state".
If we analyze
this definition, we will come to the following conclusions: First, a tax is a
compulsory payment to the public authority. Secondly, a tax is to be paid by a
person on whom it is levied whether he derives any benefit from it or not. Thirdly, a person who pays taxes to the state cannot claim that because he pays
taxes, therefore, a specific service in return should be provided to him.
For
instance, he cannot demand that a constable should be posted at his residence to
protect his property at night. The government spends money which it derives from
taxes in maintaining law and order in the country and like other individuals he
gets benefit from it. There is no direct quid pro quo (direct return) in
the case of a tax.
In the words of Thomas:
"A tax is a compulsory contribution
made to government under stated conditions and not a return for a specific
service rendered".
(2) Fee:
Definition and
Explanation of Fee:
A fee is a payment made by the citizens of a country to state for
obtaining a definite service in return. Fee. like tax, is not compulsory contribution. It is only paid by those persons who enjoy the special benefit
of the services rendered by the state. The amount of the fee is generally less
than the cost of rendering the service.
For instance, student's fee is not equal
to the cost of service rendered to .him. Some part of the total cost is covered
by fees and some by taxes. Plehn has defined fee in the following word:
"A fee
may be defined as a compulsory contribution of wealth made by a person, natural
or corporate, under the authority of public power to defray a part or all the
expenses involved in some action of the government, which while creating a
common benefit also confirms a special benefit or one that is arbitrarily so
regarded".
(3) Price:
Definition and
Explanation of Price:
Price, like fee, is
also a payment made by a person for obtaining a definite service in return. The
difference between a fee and price is that public purpose is more prominent in
fee than it is in price. Price is a voluntary payment with a quid pro quo. When
a government runs a business, it receives revenue.
For instance, government sells
timber from, its forest, iron, coal, copper salt, etc., from its mines it also
charges fare on state buses or from railways. The total revenue which the
government receives from such services of business character is called price in
Economics.
(4) Special
Assessment:
Definition and
Explanation of Special Assessment:
Special assessment is a
compulsory contribution made by the owner of a property for some benefit conferred to his property by
the public authority. In the words of Seligman:
"Special assessment is a
compulsory contribution levied in proportion to the special benefits derived to
defray the cost of a specific Improvement to property undertaken in the public,
interest".
We can say in other words that special assessment is a compulsory
payment for improvement.
For instance, a corporation provides water,
electricity, drainage, paves streets, lays out parks, etc., etc., in a
particular locality of the city. The value of all the property situated in that
locality will go up. The corporation has every right to share a part of this
unearned increment by taxing the owners of the property who have, benefited from
the improvement. This tax which is levied in respect of improvement made to the
property by the public authority is called "special assessment". Special
assessment is more or less in proportion to the benefits enjoyed by the owners
of immovable properties.
