ExpertEasy1 markMultiple Choice
AQA GCSE · Question 02 · How the economy works
Which of the following is an indirect tax?
Which of the following is an indirect tax?
Answer options:
A.
Corporation tax
B.
Income tax
C.
National insurance contributions
D.
Value added tax
How to approach this question
Understand the difference between direct and indirect taxes. A direct tax is on income or wealth. An indirect tax is on spending. Classify each option.
Full Answer
D.Value added tax✓ Correct
The correct answer is D. Value added tax (VAT) is a tax on spending, which is the definition of an indirect tax.
Indirect taxes are taxes on expenditure. Value Added Tax (VAT) is a tax added to the price of most goods and services. The other options are direct taxes: Corporation tax is on company profits, and Income tax and National Insurance are on individual earnings.
Common mistakes
Confusing the different types of taxes. A good way to remember is that you pay indirect taxes 'indirectly' through the seller of a good or service.
Practice the full AQA GCSE Economics Paper 2
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