What Is an Indirect Tax?

Indirect tax is the tax that the taxpayer can pass on to others. Such as consumption tax, value added tax, customs duties, etc. Indirect taxes are usually passed on by increasing the price of goods or services, and are ultimately borne by consumers. It has always occupied an important position in the vast Third World countries and some capitalist countries. In particular, the value-added tax and consumption tax, which organize income and regulate the economy, and cooperate with the role of national industrial policies, have received increasing attention from countries. [1]

Indirect tax

The existence of indirect taxes is closely related to the development level of the commodity economy. In less developed developing countries,
At present, there are several different views on the taxation based on whether the tax burden can be passed on and the distinction is made between direct taxation and indirect taxation.
(1) From the perspective of management, it is considered that the tax levied directly on the ultimate taxpayer is a direct tax, and the tax to be collected by a third party (such as a wholesaler) is an indirect tax. According to this interpretation, income tax is a tax levied on income earners without passing through a third party, which is called a direct tax; value-added tax and consumption tax are not levied on consumers, but passed a third party, these are indirect taxes.
(2) Based on the intention of the legislator. Where the tax is predetermined that the tax burden will not be borne directly by the taxpayer, but can be successfully passed on to others, these taxes are indirect taxes; where the intention of the legislator is to make the taxpayer of a certain tax the actual burden of the tax burden, and cannot be passed on to others Is a direct tax.
(3) Based on the tax source, the direct tax is levied on income, while the indirect tax is levied on expenditure. In this division, income tax is a direct tax and consumption tax is an indirect tax.

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