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To raise revenues for the Government
 
as well as for local authorities and similar public bodies 
(eg the European Union). 
(b) 
To cause certain products to be priced to take into account their social costs
. (For example, 
smoking entails certain social costs, such as hospital care.)
(c) 
To redistribute income and wealth
. 
(d) 
To protect industries from foreign competition.
If the Government levies a duty on all imported 
goods, much of the duty will be passed on to the consumer in the form of higher prices, making 
imported goods more expensive. 
9.4 Direct and indirect taxes 
A government must decide how it intends to raise tax revenues, from 
direct or indirect taxes
, and in 
what proportions tax revenues will be raised from each source.
A 
direct tax
 
is paid direct by a person to the Revenue authority. Examples of direct taxes in the UK are 
income tax, corporation tax, capital gains tax and inheritance tax. A direct tax can be levied on income 
and profits, or on wealth. Direct taxes tend to be progressive or proportional taxes. They are also usually 
unavoidable, which means that they must be paid by everyone. 
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PART A: THE BUSINESS ORGANISATION, ITS STAKEHOLDERS AND THE EXTERNAL ENVIRONMENT 
 
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An 
indirect tax
 
is collected by the Revenue authority from an intermediary (a supplier) who then 
attempts to pass on the tax to consumers in the price of goods they sell. Indirect taxes are of two types. 

A 
specific tax 
is charged as a 
fixed sum
per unit sold. 

An 
ad valorem tax 
is charged as a