indirect taxes on goods

indirect taxes

taxes collected on your behalf sent directly to HMRC

specific tax

tax per unit is the same throughout

do consumers pay the whole tax?

the producer pays a portion of the tax but this gets larger the more inelastic the good

producer burden/ incidence

tax paid by the producer; producer receives p3 in revenue on diagram

how can labour be affected?

labour is a derived demand; less products demanded due to price increases can lead to reduced employment levels.

evaluation points

- elasticity, magnitude, other intervention methods, substitution effect, proportion of income, illegal markets, information gaps