Which terms best describe sales tax
Asked by maham237 @ in Business viewed by 378 People
Answered by maham237 @
ANSWER: Indirect and Regressive
EXPLANATION: The Sales Tax is a tax which is imposed by the government on the sale of products and services. This tax is both Indirect and Regressive in nature.
Sales Tax is indirect because it is imposed by the government but are collected by the seller or the manufacturers (also known as Intermediary) on behalf of the government from the consumers. The intermediary then passes on the tax to the government.
Sales Tax is also regressive in nature as it imposed uniformly on the consumers regardless of the economic condition of the buyer. The term 'Regressive' means that the tax distribution pressure decreases as the buyer's income goes higher. The tax burden will be higher for low income group people and will be lower for high income group people.
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