indirect tax



Charge levied by the State on consumption, expenditure, privilege, or right but not on income or property. Customs duties levied on imports, excise duties on production, sales tax or value added tax (VAT) at some stage in production-distribution process, are examples of indirect taxes because they are not levied directly on the income of the consumer or earner. Since they are less obvious than income tax (because they don't show up on the wage slip) politicians are tempted to increase them to generate more state revenue.
Also called consumption taxes, they are regressive measures because they are not based on the ability to pay principle.

Use indirect tax in a sentence

  • There are those who believe that indirect taxes, such as the so-called "sin taxes," are the most fair way for the government to acquire the funds it needs to provide the services the people need from it.

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  • My father was not pleased about receiving an indirect tax because he really liked money and not losing it to tax people.

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  • There may be an indirect tax on a product that you need to factor into the costs that you will be paying for it.

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