There are 2 different categories taxes fall into:
- DIRECT TAXES: these are taxes that are taken directly from pay or profit, such as income tax and national insurance contributions
- INDIRECT TAXES: these are taxes that are placed on products, such as VAT or Alcohol duty
Taxes can also be defined as:
- PROGRESSIVE TAXES: taxes that take a greater percentage from the income of the rich; direct taxes are progressive
- REGRESSIVE TAXES: taxes that take a greater percentage from the income of the poor; indirect taxes are regressive
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