Paper taxes
Topic: Taxation: Direct and Indirect Taxes, GST and Global Tax Issues · NCERT: Class 12, Ch 5 "Government Budget and the Economy"
Meaning
Paper taxes are taxes that exist in the law but raise very little money. NCERT (Class 12) uses the term for direct taxes on wealth and transfers that "never brought in large amount of revenue". The collection cost and compliance burden were high compared with the revenue. So India abolished them one by one. None of the three exists in India today.
Example
- Estate duty, a tax on property passed on at death, ran from 1953 to 1985.
- Gift tax was abolished in 1998.
- Wealth tax was abolished in Budget 2015-16 and replaced by an additional surcharge on the super-rich.
Don't confuse with
- Low-rate taxes: a paper tax is not defined by a low rate. It is defined by low yield, meaning the revenue collected was too small to matter.
Related concepts
- Income tax
- Corporate tax
- Minimum Alternate Tax
- Capital gains tax
- Securities Transaction Tax
- Angel tax
- Wealth tax and inheritance tax
- Tax deducted at source
- Faceless assessment