Government Intervention - Indirect Taxes

Students need to be able to understand the aims and effects of indirect taxes as a form of government intervention in different markets and industries. Price elasticity of demand affects whether a producer can pass on an indirect tax to the consumer. Most questions on taxation require good analysis diagrams and then evaluation of the likely effects. Always remember to consider alternatives and challenge whether a tax is effective in meeting set aims. A change in taxes can have unintended consequences!