Handout 11(Indirect taxes and subsidies) Flashcards
1
Q
What is indirect taxation?
A
Taxes levied on a good/service per unit of output. Imposed on producers to increase the CoP
2
Q
How do you find the tax on a Supply & Demand diagram?
A
It is the difference between the pre-tax and post-tax supply curves
3
Q
How do you work out the tax revenue
A
Tax per unit x Quantity
4
Q
What is a progressive tax?
A
When those who are richer disproportionately take on the tax burden
5
Q
What is proportional tax?
A
People pay taxes according to their wealth, eg: 20% flat rate tax
6
Q
What is Regressive tax?
A
When those who are poorer disproportionately take on the tax burden
