Taxes are the primary lever for generating income, which is a function of removing wealth from a colony. They are collected each day. Taxes have a large impact on colonist's happiness. In proxy, due to lowering wealth, they can also impact most other parameters.

Income tax is levied against the profit your people generate. Some of their expenses, e.g. land purchases, are tax deductible. Income tax rates higher than 20% will negatively impact happiness.

Wealth is the sum of credits available in the colony held by the colonists. Wealth tax is levied against the net worth of each citizen. People will not be happy about rates beyond 1%.

You can offset the impact of higher taxes by providing entertainment for your people and by propping up the economy with retail stores.