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Example Questions
Example Question #2 : Tax Policy
An excise tax levied by a state government on gasoline is paid to the government by __________.
Possible Answers:
the oil company who sells the gasoline
any individual who buys the gasoline
only individuals who buy a certain amount of gasoline
the individual owners of gas stations
Correct answer:
the oil company who sells the gasoline
Explanation:
An excise tax is an indirect tax, or one that is not paid directly by consumers, but instead by the producers of the good being taxed. Gasoline excise taxes are typically paid by the oil companies who refine, produce, and sell the gasoline, in order to offset pollution and other trandportation costs governments incur from the sale of gas. Quite often, the cost of the tax to the company is passed on to the consumer in the form of higher prices.
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