Grade Booster student workshops are back in cinemas for 2022. Learn more

Economics

Study Notes

Indirect Taxes (Government Intervention)

Level:
AS, A Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

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:

Evaluating Government Intervention in Markets - revision video

Quizlet revision activity on government intervention in markets

Boston House,
214 High Street,
Boston Spa,
West Yorkshire,
LS23 6AD

Tel: +44 0844 800 0085

© 2021 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.