By continuing your visit to this site, you accept the use of cookies. They ensure the proper functioning of our services and display relevant ads. Learn more about cookies and act

Not yet registered? Create a OverBlog!

Create my blog

Lump-sum tax: The facts

Lump-sum tax is a fixed amount of tax payable by everyone without considering their income levels. This tax deduction is not influenced by the different income levels of individuals, ownership of property, lifestyle or how they spend. This article gives you a detailed account of lump-sum tax.

Forms of lump-sum tax

Lump-sum tax is considered a regression tax because the poor pays more tax in proportion to their income as compared to high income earners.
Common forms of fixed tax are: Personal property tax
This is charged on personal property owners such as cars and equipment, regardless of the individual’s ability to pay or income level. Real estate tax
This tax is based on per unit or per lot, thus enforces real property owners to contribute a fixed tax amount. Poll tax It is payable by all adult residents or voters, without considering their affordability and source of their income.

Who pays for lump-sum tax?

This tax is payable by all citizens, despite of their wealth, income and paying abilities. All adult residents who get their income through salaries, remunerations, lump-sum investments, gratuities, lump-sum retirement, lump-sum pension, income from lump-sum death benefits and property owners are subject to this tax.

Positive points

It is a source of income for treasury to finance government expenditure like infrastructure development. Lump-sum tax is easy to calculate, easy to account for and everyone pays a flat amount. It alleviates discrimination and creates transparency among citizens against economic development by removing the moral dilemma of other people having to pay more tax for the same service offered like the use of basic government infrastructure. Security concerns Lump-sum tax payment protects private information for individuals such as
lifestyle, wealth and income because it is applied blindly. It also reduces governement costs which are related to tax compliance.

Negative points

Lump-sum tax does not take into account the various income levels and equity, thus in principle, the lower income earners actually pay a high proportion of their income to tax, as compared to high income earners. It does not consider the ability of individuals to pay. This will result in a wealth gap among citizens, as the poor becomes poorer. Fixed tax is simply based on existence and ownership, and does not consider other factors like affordability.

Same category articles Taxation

A guide to UK corporation tax rates

A guide to UK corporation tax rates

Corporate tax rates in the UK are the 26% main rate of corporation tax (25% from April 2012) and the 20% small profits rate. Some companies may benefit from marginal relief.
How to calculate taxable income

How to calculate taxable income

Knowing how to calculate taxable income and tax payable are necessary skills that everyone should master. Having knowledge when it comes to taxation not only saves you accounting fees attached to filing tax papers, but also gives you a better appreciation of taxes and its utilitarian purpose. In this article, learn how to calculate taxable income.
What is the UK Capital gains tax rate

What is the UK Capital gains tax rate

The profit that a person makes when s/he ceases to own an asset is considered to be a taxable amount in the United Kingdom. This tax is known as the Capital Gains Tax. However, it is not as simple as merely selling an asset. The gain can also be taxed if the asset is given away as a gift, is transferred to someone else, is exchanged for something else or even if compensation for the asset is received.
Branson Chamber of Commerce: The facts

Branson Chamber of Commerce: The facts

Branson is a beautiful, idyllic, appealing city, located in the Ozarks of Southwest Missouri. It is built on a ridge and is surrounded by mountains. Tourism is Branson’s primary growth engine. Branson is full of hotels, motels, and resorts.The Branson Chamber of Commerce helps by imparting leadership skills, to ensure consistent economic development and business climate, which in turn will enhance the quality of life of all the residents and visitors.