Value-added tax is generally classified as an indirect tax because it is:
Correct answer: B. Collected through transactions and passed to consumers
- A. Collected from income earners by the tax authority
- B. Collected through transactions and passed to consumers
- C. Charged only on property owned by households
- D. Imposed directly on corporate profits
Explanation
Value-added tax is collected from businesses at different stages of production and distribution, but its burden can be passed to final consumers. A tax on income or profits is imposed more directly on the taxpayer.
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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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