Indirect Taxes

What are Indirect Taxes?

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The government imposes a tax on a taxpayer for goods and services delivered. Unlike direct taxes, indirect taxes are not assessed on the taxpayer's income, revenue, or profit, and they can be handed down from one person to the next.

Types of Indirect Taxes:

• SALES TAX

When individuals go shopping in malls or department stores, they are already paying indirect taxes. Household goods, clothing, and other essential commodities are all subject to these types of levies. The final selling price is padded with a sales tax that the shop collects and pays to the government after payment at the counter.

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• EXCISE TAX

Excise tax is also widely used. When a producer purchases raw materials for its goods, such as tobacco for cigarette manufacturers, they must already pay indirect taxes on the items. The manufacturer can pass on the burden to customers by selling cigarettes at a higher price as part of the normal course of business.

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• CUSTOMS TAX

Have you ever wondered why imported goods are so expensive? It's due to customs duty. When a container of bananas from another country enters the United States, the importer must pay a tax (customs tax), which is subsequently passed on to the customer.

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• GAS

Yes, there is an indirect tax when purchasing gasoline for vehicles.