Introduction Local and federal governments require financial resources to run their operations and provide essential services to the public. One of the approaches that these administrations use to raise funds is taxation. Adam, Kammas, and Lapatinas (2015) define tax as a mandatory monetary charge or other forms of tariffs that a state imposes on its people or organizations. Individuals or institutions that default in tax remittance may be prosecuted. The majority of nations have tax systems that target both corporate and personal income. Some administrative units also impose gift tariffs, sales, estate, payroll, and property taxes. This paper will focus on the concept of tax, its purpose, and its impacts on society. Concept of Tax Taxation refers to a strategy that a government uses to collect money from its citizens and businesses to aid in the provision of vital services like security, health care, and education. Altshuler and Goodspeed (2015) identify two forms of taxes, which are indirect and direct. As per Bratten, Gleason, Larocque, and Mills (2017), direct taxation refers to a state where an individual (employee or business person) remits levies to the government without engaging a third party. Examples of direct tax include real property, income, corporate, and personal asset levies. On the other hand, indirect taxation refers to a condition where taxpayers do not remit their levies to the government in person. Instead, an administration breaks down a tariff into multiple rates and shares them amid numerous units of society, including professionals, employers, manufacturers, and consumers (Altshuler & Goodspeed, 2015). There are multiple taxation systems, among them income-based, progressive, consumption-oriented, proportional, and regressive. Income-based taxation refers to a circumstance where a government deducts levies from a person’s or business’ revenue. Consumption-based tariff is enforced depending on the cost of products and services. A progressive levy refers to a system where an entity’s or person’s tax rate swells according to the rise in total taxable revenue. Conversely, a regressive system is a scheme where poor people are overtaxed relative to the rich. It treats all taxpayers evenly regardless of their level of income. A proportional system assigns a constant tax rate to all people without considering their income brackets. Purpose of Tax The key goal of taxation is to raise the fund needed for social and economic development. It is imperative to acknowledge that most governments use tax as the main source of money for their various projects. Adam et al. (2015) argue that a country’s economic growth is pegged on capital formation. Consequently, local and federal administrations use taxation as an avenue for capital accumulation. They achieve this objective by increasing existing tax rates or introducing additional levies. Another purpose of taxation is to preserve price stability, albeit on a short-term basis. Hennighausen and Heinemann (2015) assert that a levy is an efficient approach to managing inflation. Governments regulate private spending by increasing the rate of direct taxes. This move is useful in alleviating strain on commodity markets. Supporters of the chartalist theory of money creation argue, “Taxes are not ne