Which taxes are levied by state and local governments on purchases?

Sales taxes are levied directly on the purchase of goods and services, making them a significant source of revenue for state and local governments. When a consumer buys an item, a percentage of the sale price is added as tax, which is collected at the point of sale. This type of tax is typically applied to a wide variety of consumer goods and some services, depending on the jurisdiction.

In contrast, property taxes are based on the value of owned property and are periodically assessed based on ownership rather than when a purchase occurs. Gift taxes are imposed on the transfer of ownership of assets without compensation, and they concern the value of the gifted property rather than transactions in the marketplace. Capital gains taxes are applied to profits earned from the sale of investments or assets, reflecting the growth in value accumulated over time rather than on immediate consumer purchases.

Thus, sales taxes are uniquely tied to purchases, positioning them as the correct answer for the levy applied by state and local governments on consumer transactions.