Incidence of tax

Incidence of tax

The incidence of a tax refers to the extent to which an individual or organisation suffers from the imposition of a tax – it may fall on the consumer, the producer, or both. The incidence is also called the ‘burden’ of taxation.

How the incidence falls depends upon the price elasticity of demand.

Incidence evenly split

Incidence more on the consumer

Incidence more on the producer