What characterizes an indirect tax?

An indirect tax is characterized by the fact that it is not directly imposed on the taxpayer's income or assets, but is instead passed on to consumers in the form of higher prices for goods and services. This type of tax is typically levied on the sale of products, services, or on certain transactions, and may include taxes like sales tax, value-added tax (VAT), and excise duties. For instance, when a retailer sells a product, they may include the indirect tax in the sale price, which the consumer pays. The retailer then remits this tax to the government.

The other options focus on types of taxes that are paid directly by individuals or businesses based on their income or profits, which do not fit the definition of indirect taxes. Therefore, the defining feature of an indirect tax is its transferability to consumers rather than being directly paid by them, highlighting its role in the pricing structure of goods and services.