Question

What is the incidence of a tax?

Question 3 options:

The sum of a tax and a product’s price


The final burden of a tax


The levying of a tax on consumers


The ratio of a tax to a product’s price

Answer 1

The incidence of a tax is the final burden of a tax.

Step-by-step explanation:

Taxation has an impact and incidence to a citizen.

To differentiate between a direct and indirect tax, the incidence is taken into consideration.

A direct tax has an impact and is incidental to one person who the tax payer(usually an employee).

An indirect tax has an impact on a tax payer but its incidence may or may not be transferred to the tax payer. Which means the tax payer may transfer the incidence of the tax to another person(usually the final consumer).