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What are the means of minimizing the tax burden?

ShiftingCapitalization

Evasion

ExemptionTranspormation

Avoidance

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A. Shifting

It is the transfer of the burden

of the tax by the original payeror the one on hom the tax asassessed or imposed to someone

else! It should be borne in mindthat as transferred is not thepayment of the tax but theburden of the tax! "nly indirecttaxes may be shifted# directtaxes cannot be shifted!

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Ways of Shifting the Tax Burden1. Forward Shifting- When the burden of the tax is

transferred from a factor of production through factorsof distribution until it nally settles on the ultimatepurchase or consumer.

!. Bac"ward Shifting- When the burden of the tax is

transferred from the consumer or purchaser through thefactors of production.

#. $nward Shifting- When the tax is shifted two or moretimes either forward or bac"ward. Thus% a transfer from

the seller to the purchaser in&ol&es one shift ' from theproducer to the wholesaler% then to retailer % we ha&etwo shifts' and if the tax is transferred again to thepurchaser by the retailer% we ha&e three shifts in all.

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Impact and Incidence of Taxation

Impact of taxation is a point in hich a taxis originally imposed! The taxpayer homust pay the tax to the government! $e is

also termed as the statutory taxpayer% theone on hom the tax is formally assessed!$e is the sub&ect of taxation! "n the otherhand ' incidence of taxation is that point

on hich the tax burden (nally rests orsettles don! It ta)es place hen shiftinghas been e*ected from the statutorytaxpayer to another!

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