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What is the Difference Between Impact of Taxation and Incidence of Taxation? - ICSE Class 10 - Economics

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Question

What is the difference between the impact of taxation and incidence of taxation?

Solution

When the impact of the tax falls on a person from whom the tax is first collected, but the burden of taxation may not fall on the same person and is shifted to another person, it is called the incidence of taxation. Therefore, when the government imposes a tax, a person or institution which bears the burden of tax at the first incidence is called the impact of the tax. On the other hand, when the tax burden can be shifted to another person, the final point of the tax burden is called the incidence of the tax.

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APPEARS IN

 2012-2013 (March) (with solutions)
Question 1.2 | 2.00 marks
Solution What is the Difference Between Impact of Taxation and Incidence of Taxation? Concept: Concept for Taxes and Types.
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