VAT - Theories
VAT is an indirect tax
and so we will look in this section at relevant theories about how indirect taxes affect the economy and individual consumers. The theories considered are:
- T1 Indirect taxes - what happens to market prices?
- T2 Progressive or regressive - who pays what?
- T3 Elastic or inelastic demand - who pays how much?
- T4 Taxing externalities - why tax?