Multiple choice

Which of the following are direct taxes?

  1. Entertainment tax

  2. Income tax

  3. Sales tax

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Direct taxes are those where the burden cannot be shifted to someone else - the person paying the tax bears the final burden. Income tax is a classic example of direct tax as it is levied directly on individuals and cannot be passed on. Entertainment tax and sales tax are indirect taxes - their burden can be shifted to consumers through higher prices.

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