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McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
Edition 3ISBN: 9780078111068McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
Edition 3ISBN: 9780078111068 Exercise 1
The city of Birmingham recently enacted a 1 percent surcharge on hotel rooms that will help pay for the city's new stadium.Is this a tax? Why or why not?
Explanation
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Identification of tax
Tax: "A tax is a money required by a government that is unrelated to any specific services or benefit received from the government".The general purpose of tax collection is generating revenues for the operation of a government.urcharge as a tax:
• Surcharge refers to the additional charge levied by a government on a specific product or service.Thus, the 1% surcharge levied by the city B on the hotel rooms to pay for the stadium is a kind of tax. The surcharge will be considered as a tax because, the government of city B has collected the surcharge unrelated to any specific service or benefit provided to the taxpayer. As the surcharge is collected for a specific purpose (construction of stadium), and the tax payer will not receive the benefit directly, it will be classified as an " end marked tax ".
Tax: "A tax is a money required by a government that is unrelated to any specific services or benefit received from the government".The general purpose of tax collection is generating revenues for the operation of a government.urcharge as a tax:
• Surcharge refers to the additional charge levied by a government on a specific product or service.Thus, the 1% surcharge levied by the city B on the hotel rooms to pay for the stadium is a kind of tax. The surcharge will be considered as a tax because, the government of city B has collected the surcharge unrelated to any specific service or benefit provided to the taxpayer. As the surcharge is collected for a specific purpose (construction of stadium), and the tax payer will not receive the benefit directly, it will be classified as an " end marked tax ".
McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
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