tax
taxA payment compulsorily collected from individuals or firms by central or local government. A direct tax is levied on the income or capital of an individual or company: the word direct implies the view that the real burden of such a tax falls on the person or firm paying it and cannot be passed on to anybody else. An indirect tax is levied on sales of a good or service: the word ‘indirect’ implies the view that the real burden of such a tax does not fall on the person or firm paying it, but can be passed on to a customer or a supplier. These views on the real incidence of taxes are not necessarily correct. Income tax is levied on income; value-added tax (VAT) is levied on the value-added of a business; and an expenditure tax would be levied on income less net savings. A
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