Final answer:
Licensing fees are fixed or variable charges for government services such as driver's licenses or vehicle registration, while sales tax is a percentage of the sale price of goods and services collected at the point of sale. Licensing fees are not based on income or purchase amount, unlike sales tax, which varies by region.
Step-by-step explanation:
Licensing fees and sales taxes are both methods by which state and local governments raise revenue, but they differ significantly in how they are assessed and collected. Licensing fees are charges imposed for the granting of certain privileges or services provided by the government, such as the issuing of driver's licenses, hunting licenses, or the registration of a motor vehicle. These fees are not a percentage of a sale but rather a fixed or variable rate based on the specific license or service required.
On the other hand, sales tax is a tax imposed on the sale of goods and services. It is a percentage of the purchase price and is collected by the seller at the point of sale. While sales tax rates can vary depending on the region and on the type of goods or services, they are not related to the individual taxpayer's income but instead to the purchase price of the taxed items.
Therefore, the correct answer to the question regarding how licensing fees differ from sales tax is Option 2: Licensing fees are collected from individuals who obtain state-issued licenses; sales tax is levied on every resident of the state.