A payment compulsorily collected from individuals or firms by central or local government. A direct tax is levied on the income or capital of an individual or company: the word direct implies the view that the real burden of such a tax falls on the person or firm paying it and cannot be passed on to anybody else. An indirect tax is levied on sales of a good or service: the word ‘indirect’ implies the view that the real burden of such a tax does not fall on the person or firm paying it, but can be passed on to a customer or a supplier. These views on the real incidence of taxation are not necessarily correct. income tax is levied on income; value-added tax (VAT) is levied on the value-added of a business; and an expenditure tax would be levied on income less net savings. A wealth tax is levied on wealth; a capital gains tax is levied on the increase in the value of assets. purchase tax was a UK tax levied on the purchase of certain goods. A poll tax is levied on people, regardless of their circumstances. A lump-sum tax is levied on a particular activity, regardless of its extent or the income of the taxpayer: for example the UK television licenses. A specific tax is levied on goods at a rate fixed in money terms per unit of quantity, regardless of their price. An ad valorem tax on goods is levied as a set proportion of their value. A proportional tax increases in proportion to the taxpayer's income. With a progressive tax the proportion of income taken in tax rises with the level of income; with a regressive tax the proportion of income taken in tax falls with income.

Pre-tax income is income before direct taxes have been deducted; post-tax income is what is left after direct taxes have been deducted. Tax accounting is the activity of preparing and checking accounts in forms acceptable to the tax authorities, and advising on how to conduct one's affairs so as to minimize liability to tax. The incidence of taxation considers who ultimately bears the real burden of paying taxes. tax allowance are deductions in respect of particular activities, such as pension contributions, that individuals or firms are allowed to claim in calculating their taxable incomes. tax evasion is failing to pay taxes which are lawfully due; tax avoidance is conducting one's affairs so as to avoid becoming legally liable for taxes. tax expenditure is the loss of government revenue due to granting tax allowances to encourage particular activities. The inflation tax is the name given to the loss of real purchasing power when prices rise during inflation which is sustained by the holders of money and of government securities whose interest and redemption payments are fixed in terms of money.

See also:

ad valorem tax, capital tax, capital gains tax, carbon tax, Corporation Tax, Council Tax, direct tax, emission taxes, energy tax, expenditure tax, gift tax, income tax, indirect tax, inflation tax, inheritance tax, Inspector of Taxes, interest equalization tax, lump-sum tax, neutral taxes, payroll tax, poll tax, progressive tax, proportional tax, purchase tax, regressive tax, sales tax, specific tax, turnover tax, value-added tax, wealth tax, and withholding tax

• sacking
• sacrifice ratio
• saddle point
• safety at work
• safety net, social
• salary
• sales, retail
• sales tax
• sample
• Samuelson
• sanctions, trade
• satisficing
• saving
• savings
• savings and loan association
• savings function
• Say's law
• scale
• scarce currency clause
• scarcity
• scatter diagram
• scenario
• Schedule A tax
• scope, economies of
• screening