The item or economic activity on which tax is imposed is known as a taxable entity.

Taxation is a crucial aspect of any economy as it provides the government with the necessary funds to carry out its functions and provide public goods and services. Taxes are imposed on various items and economic activities to generate revenue for the government. These taxable entities can be individuals, businesses, or specific transactions.

Types of Taxable Entities:
There are several types of taxable entities on which taxes can be imposed. Some common taxable entities include:

1. Individuals: Most countries have a system of income tax where individuals are required to pay taxes on their earnings. This can include salaries, wages, rental income, dividends, and capital gains. Additionally, individuals may also be subject to taxes on goods and services they consume, such as sales tax or value-added tax (VAT).

2. Corporations: Businesses and corporations are also subject to various taxes. This can include corporate income tax, which is levied on the profits earned by a company. Additionally, businesses may also be required to pay property tax on their physical assets, payroll taxes on their employees' wages, and sales taxes on the goods and services they sell.

3. Transactions: Certain economic activities or transactions may also be subject to specific taxes. For example, when purchasing or selling real estate, individuals may be required to pay a property transfer tax. Similarly, when buying or selling goods and services, sales tax or VAT may be imposed.

Importance of Taxable Entities:
Taxable entities play a crucial role in the tax system as they are the source of revenue for the government. The taxes collected from these entities are used to fund public goods and services, such as infrastructure development, healthcare, education, defense, and social welfare programs. Without taxes, governments would struggle to provide these essential services and maintain the overall functioning of the economy.

Conclusion:
The item or economic activity on which tax is imposed is known as a taxable entity. These entities can be individuals, businesses, or specific transactions. By imposing taxes on these entities, governments are able to generate revenue to fund public goods and services, ultimately contributing to the overall well-being of the economy.