A direct tax is a tax imposed directly on an individual or entity and paid straight to the government.
It is typically based on income, profits, or ownership of property. Unlike indirect taxes which are levied on goods or services and can be passed on to consumers. Direct taxes are the responsibility of the person or entity on whom they are imposed. Examples include income tax, corporate tax, and property tax. These taxes are often structured progressively, meaning higher earners pay a larger percentage.
Direct taxes are a key source of public revenue and play an important role in funding government services and maintaining economic equity.