Final answer:
The tax that is levied at each stage of a product's distribution but not at the consumer level for zero-rated items is the Value-Added Tax (VAT). VAT is a consumption tax distinct from excise tax, sales tax, and income tax, with businesses recovering VAT on their production inputs while the consumer bears the final cost.
Step-by-step explanation:
The tax described in the question, which is levied at every step of a product's distribution except at the consumer level for zero-rated items, is known as the Value-Added Tax (VAT). The VAT is a consumption tax that is applied to the value added to goods and services at each stage of production or distribution. It's different from sales tax, which is only charged at the final sale to the consumer. Unlike an excise tax, which is imposed on specific goods like gasoline, cigarettes, and alcohol, VAT is generally applied across a broad range of goods and services. This is also distinct from income tax, which is levied on individual earnings and corporate profits and different from a sales tax that is collected only at the point of retail sale. The VAT system allows businesses to recover VAT on the goods and services they consume in production while ensuring that the end consumer bears the cost of the tax, except for zero-rated items like food and medicine, which are often exempt from VAT.