An example of an indirect tax is ?
Correct answer: B. VAT
- A. income tax
- B. VAT
- C. a tax on profits.
- D. inheritance tax
Explanation
VAT is an indirect tax because it is charged on spending and collected from businesses, although its burden is ultimately borne by consumers. Income, profit and inheritance taxes are direct taxes on identifiable taxpayers or income sources.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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