The property taxes on a house that Alan owns and rents out have increased. To balance his monthly budget, he decides to increase his tenants’ rent by $10 per month. He will use the extra money to pay his property tax. In this scenario, what type of tax do his tenants pay?

Indirect Tax

Explanation:

Indirect tax is a term that describes a scenario where the tax imposed on an entity is passed onto another entity which means that the second entity is being indirectly taxed by the taxing authority.

Value Added Taxes are an example of this because they are charged on retailers and suppliers who simply pass it on to consumers. This is a similar scenario because Alan is passing on the taxes placed on him to his tenants.

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