Question

A key characteristic that distinguishes direct taxes from indirect taxes is that direct taxes:

Options

• Are always paid by the final consumer of a product

• Are levied directly on income and property, and their burden cannot be shifted

• Are collected only at the point of sale of commodities

• Are levied on goods and services, and their burden can be shifted to others

Answer 1

Direct taxes are levied directly on income and property, and their burden cannot be shifted to anyone else. Examples include Income Tax, Gift Tax and Wealth Tax. Indirect taxes, in contrast, are levied on goods and services with shiftable burden.