Question

Taxes will almost always cause consumer prices to increase. How much they increase depends on:

Answer 1

Answer:

Tax rate

Explanation:

The tax and price index is a parameter that measures the effect of tax rates on consumer prices.

Firstly, taxes inflates the cost of items through Value added tax. The cost of the item becomes more expenses and the prices increase by the rate of VAT

Secondly, income taxes reduces the purchasing power of consumers and hence commodities are indirectly more expensive because at a lower disposable income consumers can only buy lesser units of a particular product.

Lastly, the corporate income taxes are factored into the prices of goods and services produced and offered by corporate organisations and that impacts the final prices at which those goods are sold on to the final consumers.