Sales tax

A consumption tax charged on the sale of goods or services, usually collected by the seller and paid to a government.

Taxable event: An event that triggers a legal obligation to pay tax. A sale creates sales-tax liability when it meets the jurisdiction’s rules.
Value-added tax: A consumption tax collected at successive production and distribution stages, with credits for tax paid on inputs. It taxes consumption through a different collection structure than retail sales tax.
Tax incidence: The distribution of a tax’s economic burden among buyers, sellers, and others. The party that sends tax to government may not bear its full cost.
Consumption tax: A tax on spending for goods and services rather than directly on income or wealth. Sales tax is one specific way to tax consumption.
Tax incidence theory: The economic analysis of how taxes change prices and distribute burdens across markets. It explains why statutory collection duties do not settle who ultimately pays.
Tax base: The value, income, transaction, or property on which a tax is assessed. The tax base determines which portions of a sale are taxed.
Retail sales tax: A consumption tax imposed on taxable retail sales to final consumers. This is the common form of sales tax collected at checkout.
Regressivity: A pattern in which a tax takes a larger share of income from lower-income people. Broad consumption taxes can claim more of low-income households’ resources.
Income tax: A tax imposed on income earned by individuals or entities. It taxes earnings rather than purchases.
Tax equity: The principle that a tax system should distribute burdens fairly among taxpayers. Sales-tax fairness depends on exemptions, rates, and households’ ability to pay.

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