A compulsory transfer of money (or occasionally of goods and services) from private individuals, institutions or groups to the government. It may be levied upon wealth, income, capital gains or in the form of a surcharge on prices or the quantity of a good sold. In the first case, it would then be called a direct tax; in the latter, an indirect tax. Taxation is one of the principal means by which a government finances its expenditure.
|Reference: The Penguin Dictionary of Economics, 3rd edt.|