Which of the following is considered an indirect tax?

• A. Corporate profit tax
• B. Sales tax
• C. Property tax
• D. Income tax

Answer: (B)

Verified step by step guidance

1. Understand the difference between direct and indirect taxes. Direct taxes are paid directly to the government by the individual or organization on whom they are imposed, such as income tax or corporate profit tax.
2. Indirect taxes are collected by an intermediary (like a retailer) from the person who ultimately bears the economic burden of the tax, such as sales tax or value-added tax (VAT).
3. Review each option: Corporate profit tax is a direct tax on company earnings; property tax is a direct tax on property ownership; income tax is a direct tax on individual earnings.
4. Sales tax is charged on the sale of goods and services and is collected by the seller from the buyer, making it an indirect tax.
5. Therefore, identify sales tax as the indirect tax among the options because it is passed on to the consumer through the price of goods or services.