Disadvantages/demerits of indirect taxes
- They are regressive in nature i.e. the rich and the poor pay the same price for commodities / widen income inequality.
- They tend to be inflationary.
- They lead to misallocation of resource.
- They encourage trade malpractices for example smuggling.
- They discourage consumption thus reduce the welfare / standard of living of people.
- They strain relationships between countries/ retaliation policy.
- They discourage investment.
- They reduce the volume and benefits of trade.
- They are not certain
- They do not promote civic responsibility among the people/tax -payers.
CATEGORIES Economics
TAGS Dr. Bbosa Science
