What is income tax?

Income tax is a tax levied on the earnings of individuals and businesses, making it the correct answer in this scenario. This type of tax is typically calculated based on a percentage of income received during a specific period, often annually. It plays a crucial role in government funding, as the revenue generated is used to finance public services such as education, healthcare, and infrastructure.

In comparison, other options refer to different forms of taxation or charges. A tax on the value of property relates to property tax, which is assessed based on the value of real estate owned. The fee for services provided by the government usually refers to specific charges for governmental services such as licenses or permits, rather than an income-based tax. A charge applied on sales transactions pertains to sales tax, which is collected on the sale of goods and services and is typically added to the total cost at the point of sale. Thus, the definition and function of income tax distinctly set it apart from these other options.