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Questions and Answers
Which of the following is an example of an indirect tax?
Which of the following is an example of an indirect tax?
What is the difference between an indirect tax and a direct tax?
What is the difference between an indirect tax and a direct tax?
Who ultimately pays the indirect tax?
Who ultimately pays the indirect tax?
What happens if the entity who pays taxes does not suffer a reduction in income?
What happens if the entity who pays taxes does not suffer a reduction in income?
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Who collects the indirect tax from the consumer?
Who collects the indirect tax from the consumer?
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Study Notes
Indirect Tax
- An example of an indirect tax is a sales tax or value-added tax (VAT) on goods and services.
Direct Tax vs. Indirect Tax
- A direct tax is a tax levied directly on the individual or entity, whereas an indirect tax is passed on to the consumer through higher prices.
Who Ultimately Pays the Indirect Tax?
- The consumer ultimately pays the indirect tax, as it is included in the price of the goods or services.
Incidence of Indirect Tax
- If the entity who pays the tax (e.g., a business) does not suffer a reduction in income, it means the tax is shifted to the consumer through higher prices.
Collection of Indirect Tax
- The seller or retailer collects the indirect tax from the consumer at the point of sale.
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Description
Test your knowledge on indirect taxes with this quiz! Explore topics such as sales tax, value added tax (VAT), and goods and services tax (GST). See how well you understand the concept and its impact on the market price of goods and services.
