what is taxation

Taxation is a system where individuals and businesses pay money to the government to fund its operations and services. It is a compulsory financial charge or some other type of levy imposed upon a taxpayer (an individual or legal entity) by a governmental organization in order to fund various public expenditures. The main objective of taxation is to raise revenue, which distinguishes it from fees and fines. Taxes are levied in almost every country of the world, primarily to raise revenue for government expenditures, although they serve other purposes as well. Taxes include income, capital gains, or estate taxes. The levying of taxes aims to raise revenue to fund governing, to alter prices in order to affect demand, or to regulate some form of cost or benefit. Taxation is the main source of revenue for most national governments, and public expenditure is one of the reasons why governments collect taxes.