Table of Contents

A Dictionary of Taxation, Second Edition

A Dictionary of Taxation, Second Edition

Elgar original reference

Simon James

This second edition of the Dictionary of Taxation contains over 200 new or substantially revised entries to enhance the existing wide range of accessible definitions and terms used to describe various aspects of tax and tax systems around the world.


Simon James

Subjects: economics and finance, financial economics and regulation, public sector economics, public finance, law - academic, tax law and fiscal policy

‘In this world nothing can be said to be certain, except death and taxes’. It is not surprising that Benjamin franklin’s dictum 1

Letter to Jean Baptiste Le Roy, 13 November 1789.

has been so widely quoted. Taxation of one sort or another can be traced back to the beginning of civilisation. Indeed it might be argued that taxes are the price of civilisation.

Originally taxation was paid in kind – such as a share of the harvest, labour or objects of value. This was, of course, replaced by money as it became the basic means of exchange and increasingly in modern economies it is becoming possible to pay taxes electronically. Historically taxation has frequently been a driving force in administrative developments. for example in Ancient Rome the census was used to record the property of citizens for the purposes of taxation. The Domesday Book was a comprehensive record of ownership and liabilities of land in eleventh-century England and formed the basis of taxation for several centuries. Taxation is often the focus of struggles over resources. King John’s demands for increased taxation brought on the crisis of 1215 which led to John’s submission and the issue of the Magna Carta. It was a factor leading to the Civil War and the execution of Charles I and it was a major influence on the development of Parliament in the UK. Its role in the American revolution. ‘No taxation without representation’ is well known, though one might agree with Callender:

That a great reluctance to pay taxes existed in all the colonies, there can be no doubt. It was one of the marked characteristics of the American People longafter their separation from England. 2

G.S. Callender (1909), Selections from the Economic History of the United States 1765–1860, p. 23.

In modern economies taxation can absorb up to a half of national income. There is no significant part of a monetary economy which is unaffected by taxation, even if it is officially classified as ‘tax-free’. One of the most obvious cases is ‘duty-free’ products at airports which are rarely priced so as to pass on the full benefit of their tax-free status to the final consumer. As basic economic analysis indicates, the effects of taxation work their way through the system by changes in prices, outputs, incomes and government expenditure.

p. viiThe importance of taxation therefore seemed to make it a highly suitable subject for a dictionary of terms. It did not seem appropriate to set out to provide a complete collection of technical terms. That would have taken volumes even for a few tax systems and would not have been of major interest to many beyond those directly involved. Instead, the intention is to provide an explanation or description of terms which are commonly used or which provide interesting insights or curiosities of this most important of economic subjects.

In compiling a book of this sort I have incurred many debts. Edward Elgar has been a tremendously supportive and encouraging publisher and I hope he is pleased with the result. Many valuable contributions and comments have come from Roy Bartlett, Chris Evans, Abe Greenbaum, Robert Mitchell, Professor Christopher Nobes, Professor R.H. Parker, Ian Wallschutzky and many officials from the Australian Tax Office, the Inland Revenue, the Internal Revenue Service and Revenue Canada Taxation.

Simon James

University of Exeter