Collection is defined as an estimated amount of tax applied to taxpayers by the governing authority and may be either in the form of a tax or a fee. It may also refer to the seizure of the assets of a business as a result of a legal action used to settle a debt or obtain tax payments. Unpaid, levying procedures applied to taxpayers by governing authorities are also defined as the legal taking of property in order to satisfy an outstanding debt or unpaid tax.
A tax is defined as a fee that the government imposes on individuals or any legal entity, whether these entities are local, regional, or national. It is paid by the taxable entity, the final consumer of the company’s goods, or the person who benefited from the services provided.
What is the difference between collection and tax?
The similarity of the concepts of taxation and collection with each other often leads to confusion between them, as they are closely related concepts, and in this article, some of these differences will be explained from several aspects in order to clarify the difference between them. The following is a statement of some of these differences:
In terms of comprehensiveness
Collection is a group of legal means through which property can be seized by the tax authority in order to pay off an unpaid debt or tax, which makes the term “collection” a broader and more comprehensive concept than the concept of “tax.”
In terms of form
Taxes take many forms when imposed, such as income tax, purchase tax, tax on imported goods, or tax on the value of property, real estate, or gifts. As for collection, it may often take the form of a fine or a tax on unpaid tax, or it may involve the seizure and sequestration of assets owned by an entity or individual in order to recover outstanding tax payments.
In terms of the authority authorized to apply
Taxes are applied by the tax authority, while collection is applied and exercised by a tax authority, such as the Public Treasury Directorate, the Internal Revenue Service, or a bank.
In terms of purpose
Taxes have many purposes, the most important of which are: using tax revenues to finance government activities, which include public services and works such as roads and schools; or the use of tax revenues in the process of financing government programs such as Medicare and social security programs, as they may be imposed to influence the behavior of individuals. For example, a strict tax is imposed on cigarettes in order to limit their purchase. As for the collection, it may be either to settle a debt or obtain unpaid tax payments.
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