Theme 1.2.9 Indirect taxes and subsidies (unit 14) Flashcards
1
Q
Why do government use taxes?
A
- To discourage behaviour
- To raise money to support other companies
- To pay government employment
2
Q
What is a subsidy?
A
It is a grant which lowers th price of a good, usually used or to increase production or consumption of a good.
3
Q
What is a specific or unit tax?
A
Is a tax levied on volume.
4
Q
What is the incidence of tax?
A
The tax burden on the taxpayer.
5
Q
What is an ad volorem tax?
A
Tax levied on as a percentage of the value of the good.
