The set of incomes on which direct taxes are levied, and transactions on which indirect taxes are levied. The tax base is lowered by all allowances and exemptions: for example, the tax base in the UK is lowered by exempting pension contributions from income tax, and by not including food and children’s clothing in the tax base for value-added tax. The broader the tax base, the lower are the tax rates required to raise any given total of tax revenue.