What Is The Difference Between Indirect Taxation And Direct Taxation?
Before trying to establish the difference between direct and indirect taxation, it is perhaps best to define the terms individually. Direct taxes are applied to sources of income, such as wages, property, savings or other taxable assets, of every person residing within any given country. These taxes are calculated according to the total income of each individual and paid regularly (once a month, or once a year, for instance) to the government. In some countries, direct taxation is referred to as legalised extortion by critics. It is, however, important for these taxes to be collected in order to support the infrastructure of each country. In contrast, indirect taxation is a charge applied to rights, privileges, expenditure or consumption, rather than income or property. Customs and excise duties on imports and production, and sales or value added tax (VAT) applied during the production-to-distribution process are all examples of indirect taxes. As they are less obvious to consumers tha
