Net Wealth Tax - Definition - Law Dictionary Home Dictionary Definition net-wealth-tax

Definition :

Net wealth tax, readings on Taxation in Developing, Countries by Fird and Oldman elucidates the concept of Wealth Tax as follows, at page 281: 'The term 'net wealth tax' is therefore deemed to be imposed on the person of the taxpayer, while the property tax often deemed to be imposed on an object - the property itself.' In Harvard Law School World Tax Series - Taxation in Columbia Net Wealth Tax is defined at page 451 thus: 'As a general rule, all debts owed by a tax-payers, whether to residents or to non-residents, are deductible if their existence is established in conformity with the legal requirements. The usual test of deductibility, as applied by the Division of National Taxes, is whether or not there is an actual, enforceable legal obligation the amount of which is fixed or computable as on December 31, of the tax year.' According to Harvard Law School World Tax Series - Taxation in Sweden - this tax has been levied in Sweden since a long time. Now it is regulated by law enacted in 1947. 'Taxable Wealth' has been defined at page 625 as follows: 'Taxable wealth consists of the capital value of the tax-payer's assets, as those are defined in the law, to the extent that this value exceeds the capital value of his debts.' In Harvard Law School World Tax Series - Taxation in the Federal Republic of Germany - it is stated at page 152 that 'the taxes on capital which are summarised in this chapter are the net worth tax, the real property tax, and the capital levy under the Equalization of Burdens Law'. It is further stated thus: 'Some of the taxes on capital are deemed to be imposed on the person of the tax-payers while other are deemed to be imposed on an object. Example of the former are the net worth tax and the capital levy under the Equalization of Burdens Law, while the real property tax and the trade tax on business capital are classified in the latter category. The main importance of this distinction is that taxes in the first group presuppose a tax-payer with independent legal existence, that is, an individual or a legal entity (juridical person), while in the case of taxes in the second group, the taxable object itself is deemed liable for the tax, in addition to its owner, so that the tax-payer can be partnership, association of the civil law, or other combination of persons without separate legal existence. Taxes of the first type give consideration to the tax-payer's ability to pay, while those of the second type consider merely the value of the taxable object, such as the capital of a business, in the case of the trade tax on business capital, or the assessed value of real property, in the case of the real property tax', Union of India v. Harbhajan Singh Dhillon, AIR 1972 SC 1061: (1971) 2 SCC 779: (1972) 2 SCR 33.