Indirect taxes Flashcards
1
Q
What are indirect taxes?(examples)
A
taxes on expenditure e.g. VAT and excise duty
2
Q
What is VAT an example of?
A
An AD VALOREM TAX
3
Q
define ad valorem tax
A
when tax on goods increases in proportion to the value of the tax base
4
Q
what is the tax base for VAT
A
The price of the good
5
Q
what is current VAT?
A
20%
6
Q
what are excise duties an example of?
A
a specific or unit tax
7
Q
define specific/unit tax
A
the amount of tax levied does not change with the value of the goods, but rather increases with volume
8
Q
what happens to supply when tax is added?
A
It decreases
9
Q
what happens to price when tax is added?
A
It rises
10
Q
what happens to the supply curve when tax is added?
A
pushes/shifts up
