Taxes on goods and services such as GST and VAT are referred to as what?

Taxes on goods and services such as GST and VAT are referred to as what?

• A. Indirect Taxes
• B. Direct Taxes
• C. Subsidy
• D. Tax

Answer: (A)

Indirect taxes are taxes charged on the sale and purchase of goods and services, like GST and VAT. They're collected by sellers at the point of sale and then passed to the government, so the person who ultimately bears the burden is usually the consumer through higher prices. This differs from direct taxes, which are paid directly by individuals or firms on income, profits, or wealth. A subsidy is the opposite of a tax, a payment to support a good or activity, and a general tax term is too broad for this specific example. So, taxes on goods and services like GST and VAT are indirect taxes.

Indirect taxes are taxes charged on the sale and purchase of goods and services, like GST and VAT. They're collected by sellers at the point of sale and then passed to the government, so the person who ultimately bears the burden is usually the consumer through higher prices. This differs from direct taxes, which are paid directly by individuals or firms on income, profits, or wealth. A subsidy is the opposite of a tax, a payment to support a good or activity, and a general tax term is too broad for this specific example. So, taxes on goods and services like GST and VAT are indirect taxes.