Question on: JAMB Economics - 2018
Which of the following is not a direct tax?
A
capital gains tax
B
purchase tax
C
personal income tax
D
capital tax
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Correct Option: B
A direct tax is a tax paid directly to the government by the person or entity on whom it is levied. Indirect taxes, on the other hand, are levied on one entity, but the burden is passed on to another.
- Capital gains tax, personal income tax, and capital tax are all paid directly by individuals or companies to the government.
- Purchase tax (also known as sales tax or value-added tax) is levied on the seller, but the consumer ultimately bears the burden of the tax through the increased price of the good or service. It is thus an indirect tax.
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