An indirect tax is paid by the consumer with the purchase of a product. The tax is indirect because the consumer is not paying it directly to the government, as is the case with income taxes. Instead, the consumer pays the tax indirectly as part of their product purchase. Supply chain entities or those selling products collect the tax. It is up to the selling entity to charge the correct amount of tax and submit those taxes to the government. As the price of a product increases, so does the tax paid on it. The tax is levied regardless of income, making it more burdensome to lower-wage earners than those with a higher income.
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