VAT is an example of a/an:

**The reasoning** VAT (Value Added Tax) is an **indirect tax** because it's collected from one person but the tax burden falls on someone else. When you buy a ₦1,000 item with 7.5% VAT, you pay ₦1,075. The seller collects that ₦75 and sends it to government — but YOU bore the cost. The tax was passed on to you, the final consumer. **Direct taxes** (like income tax) go straight from your pocket to government — you can't shift the burden to someone else. When FIRS deducts tax from your salary, that's YOUR burden directly. **Why the wrong options tempt you** **A) Direct tax** — You might think "I'm directly paying at the counter" but that's not what "direct" means in taxation. Direct means the person assessed = person who bears it. **C) Capital tax** — Sounds sophisticated, but capital taxes are on wealth/assets (like capital gains tax on profit from selling property). **D) Income tax** — VAT hits consumption (buying things), not earning money. **Quick takeaway** Remember: **Indirect = it shifts.** If the tax can be passed to another person through prices, it's indirect — VAT, customs duty, excise tax all qualify.