Solution-

The statement is true.

Of being a Welfare State, the Government of any country takes primary responsibility for the welfare of its citizens, in the matters of healthcare or education or employment or infrastructure or social security and other development needs. To facilitate these welfare subject, Government needs revenue at large. Therefore, the taxation is the primary source of revenue for the state government for incurring and managing such public welfare expenditure. In other words, Government is getting taxes from public at one hand and reccuring at another hand; it spends on welfare expenditure for publicat large. So, taxes are compulsory and enforced contribution to the Government revenue by public. Government may levy taxes on income, business profits or wealth or add it to the cost of some goods, services, and transactions. In GCC , there are six members countries such as Saudi Arabia, Dubai, Qatar, Bahrain, Oman and Kuwait. In generat terms , the difference between direct taxes and indirect taxes described below :

Difference between Direct Taxes and Indirect Taxes

There are two types of taxes: Direct Tax and Indirect Tax, of which incidence and impact fall on the same person, is known as Direct Tax, such as Income Tax. .On the other hand, tax, of which incidence and impact fall on two different persons, is known as Indirect Tax, such as GST, Excise, Sales tax etc.It means,, whereas in the case of Indirect Tax, tax is recovered from the assessee, who passes such burden to another person & is ultimately borne by consumers of such goods or services. In oman from direct tax perspective , personal income tax is exempt including tax on capital gain income , or income from property or wealth and there are provision for taxability of withholding tax for foreign nationals at the rate of 10 % . Income tax mainly enforced on businesses and companies. there is small percentage of taxability on small business owners. For indirect taxation, they have agreed to be part of GCC countries and liable to GCC Vat.

GCC VAT is an indirect tax that is levied on goods and services in the member states of the Gulf Cooperation Council. The member states of GCC are Saudi Arabia, Dubai, Qatar, Bahrain, Oman and Kuwait

some other illustration for difference in the nature as :

Direct Tax                                                                                    Indirect Tax

> The Incidence and impact fall on the same person     >The Incidence and impact fall on two

                                                                                  different person

> It's levied on income                                           > It levied on goods and services

> Progerssive Nature                                                   > Regressive Nature

> Rates of Taxes Varies assessee based                      > Mostly same rate on similar goods

                                                                                    or services.

> Example of direct taxes are Income Tax,                     > Example are custom duty, excise

    Wealth tax                                                                  duty, GCC Vat.

Solution-

The statement is true.

A proportional tax is the one which imposes the same relative burden on all taxpayers—i.e., where tax liability and income grow in equal proportion. However, a progressive tax is characterized by a more than proportional rise in the tax liability relative to the increase in income, and a regressive tax is characterized by a less than proportional rise in the relative burden. Thus, progressive taxes are seen as reducing inequalities in income distribution, whereas regressive taxes can have the effect of increasing these inequalities

Impact on society

The taxes that are generally considered progressive include individual income taxes and estate taxes. Income taxes is in the progressive nature. The taxes are levied on individual income. however, may become less so in the upper-income categories—especially if a taxpayer is allowed to reduce his tax base by declaring deductions or by excluding certain income components from his taxable income. Income tax is basically large source of revenue to the state government. We see normally, rich and capitalist are mainly the contributor to the income tax. and government try to impose progressive taxes to increase the state revenue so as to be less regressive on indirect tax source.

Second example are proportional tax rates that are applied to lower-income categories will also be more progressive if personal exemptions are declared.

Income measured over the course of a given year does not necessarily provide the best measure of taxpaying ability. For example, transitory increases in income may be saved, and during temporary declines in income a taxpayer may choose to finance consumption by reducing savings. Thus, if taxation is compared with “permanent income,” it will be less regressive (or more progressive) than if it is compared with annual income.

Sales taxes , Vat and excises (except those on luxuries) tend to be regressive, because the share of personal income consumed or spent on a specific good declines as the level of personal income rises.

We see, if an economy is depended more on progressive taxes the less shall be regressive taxes imposed or vice versa. In developed countries like USA and Britain , France, large tax revenue are collected from progressive taxes so the indirect taxes such as vat and other taxes rates are lower and the burden of taxes on public are reduced. In oman , the personal income tax are exempt so the main source of revenue from indirect taxes which are regressive in nature and public is overburdened and prices and inflation are high for goods in the market. but countries manage a balance between the source of taxes.