Sales Tax is a kind of consumption tax that a business is liable to pay to the government on the sale of a good or service according to the laws of the jurisdiction under which the business is operating. Other consumption taxes can include tariffs, excise duties, etc.
Sales tax is added to the price of the good or service being sold and passed on to the concerned party. This concerned party may be an intermediary or the end consumer. For instance, retail sales taxes are charged to the end-user who bears the ultimate liability of paying that tax.
Different countries handle sales tax differently. In the United States, sales taxes are charged according to the local jurisdictions of each state. For example, California imposes a sales tax rate of 7.25%.
