What might be the impact on consumers if a rise in property tax rates on businesses is passed by a local government?

Question

Business

Delilah Wilcox

5 July, 10:16

What might be the impact on consumers if a rise in property tax rates on businesses is passed by a local government?

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Answers (2)

Know the Answer?

Lilly Herring · Answer 1

Consumers will have to pay more price for the purchase of same product or service.

Explanation:

A company makes money by selling the products they produce and get Revenue on the sales. Then they take out their expenses from those revenues, pay their taxes and finally get the profit out of the products they sold. If the amount of tax increases, then the profits they earn decreases because they have to pay extra tax now. So what companies do, they don't cut their profits, rather they increase the price of their product and earn more revenues on the same sale. Then they pay their extra taxes and get their same profits again. So this price increase has to be faced by the consumers. In short, if the amount of property taxes on the businesses increases, consumers will have to pay more for the purchase of same product or service.

Alyssa Villegas · Answer 2

Answer: The correct is an increase in the cost of the products and services that consumers pay.

Explanation: If the local government increases property taxes on businesses this is increasing the operating costs of those businesses. The businesses are going to in turn pass the property tax increase on to the customers by increasing their rates on the goods and services that they sell.