Tax
Definition and types
Taxes come in various forms, but they all correspond to the money collected by a government. This money is then used to finance specific facilities or services such as hospitals, schools, museums, libraries, etc. The most common individual taxes are:
- income tax: is a percentage of individual earnings given to the government;
- consumption tax: is the VAT (Value Added Tax) and excise duties on tobacco, alcohol, energy products and some specific goods, such as coffee in Germany;
- property tax: is based on the value of land and property assets;
- tariffs/customs duties: tax on imported goods intended to support national businesses;
- excises: indirect tax charged on the sale of particular goods;
- environmental tax is an additional cost added to the price of buying or using polluting products or activities, which discourages their consumption and production;
- capital gains (type of tax levied on capital gains, profits an investor benefits from when a person sells a capital asset for a price that is higher than the purchase price);
- inheritance tax: is a tax paid on the money or property that a person inherits from another person after that second person dies.