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"Unit taxes in the UK affect consumers more than Producers" Is This True and Why?
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"Unit taxes in the UK affect consumers more than Producers" Is This True and Why? A unit tax is a tax that is imposed on a good irrelevant of its price. Therefore the tax is fixed per unit of the good that is purchased, so that the as a percentage of the price will fall the more goods that are purchased. This has the consequence of shifting the supply curve to the left by the value of the tax (A fig 1.) Unit taxes are also a form of indirect taxation, since it is not being charged directly to the consumer, but are charged to the producer who as a result will charge higher prices in order to recoup the profits that have been lost. Because of this shift, there is excess supply, as the price will have risen for the same quantity being produced, consequently the price will be forced...
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