Stating the Distinctions Between Direct and Indirect Taxes

The distinctions between the indirect tax and direct tax can be complicated for it certainly depends on whether the person asks from the “economic” or “legal” perspective. These are the two concepts that divide the relevance between direct and indirect taxes. But with the aid of information presented by the government, people are all enlightened and guided about these concepts.

From the economic perspective, the direct taxes refer to the levies both collected and imposed on the particular organizations or group of people. The best example for it is the collection of taxes from certain individuals who are actually earning their income. In terms of indirect taxes, these are collected from specific organizations or somebody other than an entity or person that typically responsible for taxes. The sales tax will never be considered as the direct tax due to the fact that the money is been collected from the merchants, and not from the individuals who are paying the tax.

When it comes to the legal perspective, the meaning of an indirect and direct taxes has both differences. For the direct tax, it is applied only to poll and property taxes. These taxes are judged on existence or simple ownership. On the other hand, the indirect taxes have been imposed upon a wide variety of abstract ideas which include activities, privileges and rights.

The tax on the property sale will be considered as indirect taxes while the tax owed on a property is direct. Now that people already have the idea about the direct and indirect tax distinctions, they can now easily understand other concepts related to it.