Indirect Taxes and Subsidies Flashcards
1
Q
Definition of an Indirect tax
A
Is a tax on expenditure
2
Q
The two types of Indirect tax
A
Specific tax
Ad valorem tax
3
Q
Definition of Specific tax
A
Changes with the volume of goods purchased (e.g. excise duties)
4
Q
Definition of Ad valorem tax
A
Changes with the value of goods purchased or of the tax base (e.g. VAT)
5
Q
Definition of the Burden of tax
A
The percentage that firms and consumers pay of the specific tax using producer and consumer surplus
