Taxes on transactions are levied on sales of goods and services and on privileges. There are three main types-general sales taxes, excise taxes, and tariffs.
General sales taxes apply one rate to the sales f many different items. Such taxes include state sales taxes in the United States and the Federal sales tax in Canada. The value-added tax is a general sales tax levied in France, The United Kingdom, and other European countries. It is applied to the increase in value of a product at each stage in its manufacture and distribution.
Excise taxes are levied on the sales of specific products and on privileges. They include taxes on the sales of such items as gasoline, tobacco, and alcoholic beverages. Other excise taxes are the license tax, the franchise tax and the severance tax.The license tax is levied on the right to participate in an activity, such as selling liquor, getting married, or going hunting or fishing. The franchise tax is a payment for the right to carry on the processing of natural resources, such as timber, natural gas, or petroleum.
Tariffs are taxes on imported goods. Countries can use tariffs to protect their own industries form foreign competition. Tariffs provide protection by raising the price of imported goods, making the imported goods more expensive than domestic products.
General sales taxes and taxes on gasoline and other products are called indirect taxes because they tax a service or privilege instead of a person. Manufacturers and business owners pay these taxes, than add the cost to the prices they charge. These taxes may be called shifted taxes because manufactures and business owners shift the cost of the tax their customers.
Other taxes include estate taxes, inheritance taxes, and gift taxes. An estate tax is applied to the value of property before it has been given to heirs. An inheritance tax is levied on the value of property after it has been given to heirs. A gift tax is applied to the value of property that is given away during a donor’s lifetime. The donor pays the tax.
In the United States, the federal government and some state governments levy estate and gift taxes. Only state governments levy inheritance taxes. In Canada, only the province of Quebec levies gift and inheritance taxes. Canada has no estate taxes.
General sales taxes apply one rate to the sales f many different items. Such taxes include state sales taxes in the United States and the Federal sales tax in Canada. The value-added tax is a general sales tax levied in France, The United Kingdom, and other European countries. It is applied to the increase in value of a product at each stage in its manufacture and distribution.
Excise taxes are levied on the sales of specific products and on privileges. They include taxes on the sales of such items as gasoline, tobacco, and alcoholic beverages. Other excise taxes are the license tax, the franchise tax and the severance tax.The license tax is levied on the right to participate in an activity, such as selling liquor, getting married, or going hunting or fishing. The franchise tax is a payment for the right to carry on the processing of natural resources, such as timber, natural gas, or petroleum.
Tariffs are taxes on imported goods. Countries can use tariffs to protect their own industries form foreign competition. Tariffs provide protection by raising the price of imported goods, making the imported goods more expensive than domestic products.
General sales taxes and taxes on gasoline and other products are called indirect taxes because they tax a service or privilege instead of a person. Manufacturers and business owners pay these taxes, than add the cost to the prices they charge. These taxes may be called shifted taxes because manufactures and business owners shift the cost of the tax their customers.
Other taxes include estate taxes, inheritance taxes, and gift taxes. An estate tax is applied to the value of property before it has been given to heirs. An inheritance tax is levied on the value of property after it has been given to heirs. A gift tax is applied to the value of property that is given away during a donor’s lifetime. The donor pays the tax.
In the United States, the federal government and some state governments levy estate and gift taxes. Only state governments levy inheritance taxes. In Canada, only the province of Quebec levies gift and inheritance taxes. Canada has no estate taxes.
