There are two main types of taxation - direct and indirect
Direct taxation is levied on income, wealth and profit. i.e. income tax, corporation tax. The burden cannot be passed on.
Indirect taxation are taxes on spending. i.e. excise duties on fuel, VAT. Producers may be able to pass this onto consumers depending on the PED of the good.

Progressive tax - the marginal rate of tax rises as income rises e.g. income tax, corporation tax
Proportional tax - marginal rate is constant e.g. National Insurance contributions
Regressive tax - the rate of tax falls as income rises e.g. excise duties of items such as cigarettes and alcohol as they form a higher percentage of Yd

Some could argue that a lower tax society stimulates work incentives and productivity, creates more jobs as businesses have less tax to pay and encourages a flow of FDI

Some could also argue that taxation is needed to fund public services and needed for the final distribution of income and wealth

	Created by Hannah Nad over 8 years ago

Powerpoint on AD

Aggregate Demand, Fiscal Policy, Supply side policy, consumption, investment, balance of payments