1 - Gov Intervention - Indirect Tax Flashcards
(5 cards)
1
Q
What’s an indirect tax?
A
Tax imposed on producers by gov
- may be passed onto consumers through higher prices
2
Q
Examples of indirect taxes
A
- duties o cigarettes,alcohol, fuel
- sugar levy
- VAT
- carbon taxes
3
Q
What’s the tax incidence?
A
How the final burden of a tax is shared between the producers and the consumers
4
Q
Advantages of indirect taxes
A
- correct market failure
- deters consumption of demerit goods
- revenue for gov
- helps tackle climate change
5
Q
Disadvantages of indirect tax
A
- regressive
- hard to determine best size
- compliance costs
- tax evasion
- black market
- gov failure/unintended consequences
