A sales tax is a type of indirect tax.

Quick Scoop

  • A sales tax is charged on the sale of goods and services, usually added to the price at the checkout.
  • The seller collects it from the buyer and then pays it to the government, so the person legally responsible for paying the tax to the government is not the one who ultimately bears the cost directly; this makes it an indirect tax.
  • In many systems, sales taxes are also considered regressive in effect (they take a larger share of income from low‑income consumers), but conceptually they are categorized as indirect, not progressive, proportional, or direct taxes.

Why not the other options?

  • Progressive tax: Tax rate rises as income rises (typical of income tax), which is not how standard sales tax is structured.
  • Proportional tax: Same percentage on all income levels; sales tax is applied to spending, not income, and its real burden varies by income group.
  • Direct tax: Paid straight to the government by the person on whom it is imposed (like income or property tax), unlike sales tax which passes through a seller.

Answer: A sales tax is a type of indirect tax.

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