What type of tax is a sales tax?

Sales tax is classified as a tax levied by local governments on retail sales. This means that when consumers purchase goods or services, a percentage of the sales price is added as tax, which is collected at the point of sale. Local government entities, such as cities or counties, typically have the authority to impose this tax to generate revenue that can be used for community services, infrastructure, and other public needs.

Unlike other tax types, sales tax is specifically focused on consumption and applies primarily to tangible personal property, though some services may also be taxable depending on the jurisdiction's laws. This distinguishes it from a federal tax on corporate profits, which targets business earnings, a tax on inherited assets that deals with estate transfers, or a property tax, which is based on the value of real estate owned. Each of those tax types serves different purposes and is applied under different circumstances, highlighting the unique nature of sales tax in relation to consumer purchases at the retail level.