Definition

1. Noun:
   • A tax levied on goods or services rather than on persons or organizations: An indirect tax is a tax collected by an intermediary (like a retailer) from the person who bears the ultimate economic burden of the tax (the consumer). The tax is not paid directly by the consumer to the government, but is instead included in the price of a purchased good or service.

Usage Examples

• Noun:
  • Value Added Tax (VAT) is a common form of indirect tax in many countries.
  • The government increased the indirect tax on fuel, leading to higher prices at the pump.
  • Economists often debate the impact of indirect taxes on low-income households.

Advanced Usage

• "to shift an indirect tax": Refers to the process where the entity legally responsible for paying the tax (e.g., a producer) passes the cost onto the consumer in the form of higher prices.
  • The manufacturer was able to shift the indirect tax entirely to the end consumer.

Variants and Related Words

• Direct tax (n): A tax levied directly on a person or organization, such as income tax or corporate tax. This is the conceptual opposite of an indirect tax.
• Excise tax/duty (n): A specific type of indirect tax levied on particular goods, such as alcohol, tobacco, or gasoline.
• Sales tax (n): A common type of indirect tax imposed on the sale of goods and services.

Synonyms

• Consumption tax: A tax on goods and services purchased by consumers.
• Transaction tax: A tax levied on a specific financial transaction.

Related Concepts (Not Phrasal Verbs or Idioms)

• Tax incidence: The analysis of who ultimately bears the economic burden of a tax, which is a key concept in understanding indirect taxes.
• Regressive tax: A tax that takes a larger percentage of income from low-income earners than from high-income earners. Many indirect taxes are considered regressive.

Noun

1. a tax levied on goods or services rather than on persons or organizations