High Indirect Taxes on Goods and Services

[fokhrul88]

The UK Government tends to levy relatively high indirect taxes on goods and services that are in inelastic demand. Explain, with examples, why this might be the case.

Anyhelp is appreciated.

[factor-fiction]

Even if you haven't attended your lectures or read any of your books I think a common sense angle would help (think petrol, cigs, alcohol), and a google search on the words you've used will throw up all sorts of useful stuff

[buildersmate]

It's a pretty fundamental principle of economics - so go back to page 1 of whatever book you were reading.
Inelastic demand means (in theory) the increase in price doesn't change the demand. If if Government puts more tax on it, it doesn't impact the manufacturer (who sells the same, so won't get all upset and start lobbying) and the Government can project how much extra revenue will be raised (because the maths are really simple (x% tax raised on whatever the volume sold was last year).

[CovKid]

Worth distinguishig short/long term price elasticity. In short run, petrol is fairly price inelastic. Over the longer term we can
buy smaller cars, move closer to work/change jobs, use alternative transport/fuel.