Question

“If the Government wants to minimize the tax burden of any indirect tax

on consumers, then it is necessary that the Government impose this tax on

producers rather than consumers”. Is this statement True or False? Justify

and logically analyze your argument. Draw graphs if necessary.

Answer 1

False

Imposing tax on producers will make them sell their produce to consumers at a higher price so as to compensate for increased cost of production. Therefore, consumers will still pay tax but indirectly.