Recently, the government noticed that the consumption of cigarettes has increased among working individuals. To counter this increase, the government decides to raise the cost of cigarettes by increasing the excise tax on them. After six months, the government observes that the consumption of cigarettes has decreased to some extent. Which type of taxation did the government use?

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Social Studies

Owen Roberts

4 November, 21:59

Recently, the government noticed that the consumption of cigarettes has increased among working individuals. To counter this increase, the government decides to raise the cost of cigarettes by increasing the excise tax on them. After six months, the government observes that the consumption of cigarettes has decreased to some extent. Which type of taxation did the government use?

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Abagail Martin · Answer 1

Indirect tax, on a good or service. The tax is paid by the consumer of the goods when the item is bought, but the tax is paid to the seller or maker of the item. That seller or maker, then pays the collected tax on the item to the government.