Tax and Subsidies Flashcards

1
Q

Direct tax

A

Tax levied directly on an individual or organisation

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2
Q

Indirect tax

A

Tax levied on a good or service

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3
Q

Indirect tax

A

Tax levied on a good or service

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4
Q

Specific Tax

A

Causes a paralle shift in the supply curve - same fixed amount at all prices - fuel duty, beer duty

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5
Q

Ad valorem tax

A

Causes a non-parallel shift in the supply curve - tax increases as the amount sold rises - VAT, import tarrifs

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6
Q

Reasons for taxes

A

A
Govts impose tax to increase government revenue and to discourage certain ecnomic activites - sugar tax, tobacco tax

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