Which of the following is an example of an indirect tax?

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

Answer: (D)

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. Recognize that 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. Analyze each option: Corporate profit tax, income tax, and property tax are all direct taxes because they are paid directly by the entity or individual to the government.
4. Identify that sales tax is an indirect tax because it is collected by sellers from consumers at the point of sale and then passed on to the government.
5. Conclude that among the given options, sales tax is the example of an indirect tax.