Direct taxes, indirect taxes and peak tax

Direct taxes

Direct taxes are taxes that are levied directly by governments.

The direct refers to the fact that the tax authorities charge the tax directly or through a deduction obligation to the taxpayer. This is in contrast to indirect tax such as the sales tax whereby the various phases in the value-added value chain pay taxes, as a result of which the final tax burden falls on the end-user (consumer).

Indirect taxes

Indirect taxes are taxes levied by governments in an indirect way, such as sales tax (VAT).

These taxes are indirect in the sense that they are collected by an intermediary, the seller, who charges the tax to the final payer in the price.

Peak tax

A peak tax is a levy (financial) to discourage the use of motor vehicles during rush-hour periods.

In the world, peak taxes have been introduced at various locations, particularly as part of a toll collection system to limit car traffic in the city center during the day or during rush hour, such as Electronic Road Pricing in Singapore and London congestion charge in London.

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