Indirect Tax
Tax paid indirectly through intermediary; typically on products.
Formula
Price to Consumer = Pre-tax Price + Indirect Tax
Real World
When the UK government raised tobacco duty in 2023, cigarette prices in shops rose immediately — the tax was collected from manufacturers but passed on to consumers through higher prices.
Exam Focus
Remember indirect taxes can be specific (fixed £ per unit) or ad valorem (% of price) — state which type when explaining the impact on price.
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