The term indirect tax has more than one meaning.
In the colloquial sense, an indirect tax (such as sales tax A sales tax is a consumption tax charged at the point of purchase for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale. A portion of the sale may be exempt from the calculation of tax, because sales tax laws usually contain a list of exemptions. Laws governing the tax may, value added tax Value added tax , or goods and services tax (GST) is a consumption tax (CT) levied on any value that is added to a product. In contrast to sales tax, VAT is neutral with respect to the number of passages that there are between the producer and the final consumer whereas sales tax is levied on total value at each stage (though in the U.S. and many (VAT), or goods and services tax Value added tax , or goods and services tax (GST) is a consumption tax (CT) levied on any value that is added to a product. In contrast to sales tax, VAT is neutral with respect to the number of passages that there are between the producer and the final consumer whereas sales tax is levied on total value at each stage (though in the U.S. and many (GST)) is a tax To tax is to impose a financial charge or other levy upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the customer). The intermediary later files a tax return and forwards the tax proceeds to government A government is the body within a community, political entity or organization which has the authority to make and enforce rules, laws, and regulations.[citation needed] with the return. In this sense, the term indirect tax is contrasted with a direct tax which is collected directly by government from the persons (legal or natural) on which it is imposed. Some commentators have argued that "a direct tax is one that cannot be shifted by the taxpayer to someone else, whereas an indirect tax can be."[1]
An indirect tax may increase the price of a good so that consumers are actually paying the tax by paying more for the products.[2] Examples would be fuel, liquor, and cigarette taxes. An excise duty on motor cars is paid in the first instance by the manufacturer of the cars; ultimately the manufacturer transfers the burden of this duty to the buyer of the car in form of a higher price. Thus, an indirect tax is such which can be shifted or passed on.
The term indirect tax has a different meaning for U.S. constitutional law purposes. See Direct tax The term direct tax has two meanings: generally, a tax paid directly to the government by the persons on whom it is imposed; and in the United States specifically, a constitutional tax on property "by reason of its ownership". Certain taxes may be direct taxes in the general sense but indirect taxes in the American constitutional sense; see also Excise An excise or excise tax may be defined broadly as an inland tax on the production or sale of a good, or narrowly as a tax on a good produced within the country. Excises are distinguished from customs duties, which are taxes on importation. Excises, whether broadly defined or narrowly defined, are inland taxes, whereas customs duties are border.
Notes
- ^ Britannica Online, Article on Taxation. See also Financial Dictionary Online, Article on Direct taxes.
- ^ Financial Dictionary Online, Article on Indirect taxes.
See also
- Direct tax The term direct tax has two meanings: generally, a tax paid directly to the government by the persons on whom it is imposed; and in the United States specifically, a constitutional tax on property "by reason of its ownership". Certain taxes may be direct taxes in the general sense but indirect taxes in the American constitutional sense
- United Kingdom Corporation Tax Corporation tax is a tax levied in the United Kingdom on the profits made by companies and on the profits of permanent establishments of non-UK resident companies and associations that trade in the EU. Prior to the tax's enactment on 1 April 1965, companies and individuals paid the same income tax, with an additional profits tax levied on
- Income tax in the United States The federal government of the United States imposes a progressive tax on the taxable income of individuals, partnerships, companies, corporations, trusts, decedents' estates, and certain bankruptcy estates. Some state and municipal governments also impose income taxes. The first Federal income tax was imposed during the Civil War, then again in
- Value Added Tax Value added tax , or goods and services tax (GST) is a consumption tax (CT) levied on any value that is added to a product. In contrast to sales tax, VAT is neutral with respect to the number of passages that there are between the producer and the final consumer whereas sales tax is levied on total value at each stage (though in the U.S. and many
External links
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Baltimore Sun
Besides, indirect taxes have hit the industry, argued John Gorzo, president of the Howard County Licensed Beverage Association and owner of Glenwood Wine ...
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