WAEC Economics 2002 Theory question 108

(a) A direct tax is levied on the income or wealth of persons and firms and is paid directly to the tax authority by the person on whom it is imposed; its burden cannot be shifted (e.g. personal income tax, company tax). An indirect tax is levied on goods and services; it is paid to government by the seller but its burden can be shifted to consumers through higher prices (e.g. VAT, excise and import duties).
(b) Advantages of direct taxes: can be progressive, so equitable (based on ability to pay).
Reduce income inequality.
Certain: the taxpayer knows how much and when to pay.
Revenue is easy to estimate.
Economical to collect, especially PAYE.
Not inflationary: they reduce spending power rather than raise prices.
Make citizens aware of their civic responsibility.

Explain the difference in who finally bears the tax.