Final answer:
In the NIPA, sales taxes are categorized as Indirect business taxes. Sales taxes are imposed on retail sales and can be regressive, affecting lower-income individuals more. They are a significant source of state and local government revenue.
Step-by-step explanation:
In the National Income and Product Accounts (NIPA), sales taxes are referred to as Indirect business taxes. These taxes include general sales taxes, excise taxes, business property taxes, license fees, and customs duties. Sales taxes are typically imposed as a percentage of the sales made by firms and are generally levied on retail sales. However, some items may be exempted from sales taxation, such as food and medicine. It's important to recognize that these indirect taxes can be regressive, affecting those with lower incomes more significantly as they spend a larger share of their income on goods covered by sales taxes.
At the state and local levels, sales taxes are a main source of revenue, alongside property taxes and funds passed along from the federal government. The reliance on these taxes varies across different state and local governments, and over time, they have been rising as a share of GDP to match increases in government spending.