Study Notes
Indirect Taxes (Government Intervention)
- Level:
- AS, A-Level, IB
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 24 Mar 2019
An indirect tax is imposed on producers (suppliers) by the government. Examples include duties on cigarettes, alcohol and fuel and also VAT. A carbon tax is also an indirect tax. Indirect taxes are a form of government intervention in markets.
Value added tax in the UK
- The standard rate of VAT is 20%
- Reduced rate of 5% is applied to domestic fuel and power, women’s sanitary products, children’s car seats, contraceptives
- Zero-rated VAT on Food, Construction of new dwellings, rail and bus fares, books, newspapers and magazines, Children’s clothing, prescription drugs
- Exempt from VAT - rent on domestic dwellings, Private education, Health service, Postal services, Burial and cremation, Small traders below the turnover limit for VAT registration
Revision for other types of government intervention:
Quizlet revision activity on government intervention in markets
You might also like

Scotland introduces a minimum charge for plastic bags
21st October 2014
Flood defences and the Public Goods debate
7th January 2014

Cigarettes, demerit goods and government failure
12th July 2013

Climate Change Policies - Finding the Right Mix
30th April 2012

How useful is economics? Nobel winner Al Roth
24th August 2014

Information Economics - How Many Sugars in a Coke?
5th January 2014
25 stories on Market Failure
21st January 2016
Alcohol information failure
13th January 2010