Difference Between Impact Incidence and Shifting of Taxation
Impact Incidence: The first resting point of a tax is its impact. For instance, the manufacturer is responsible for paying any excise duty levied on the manufacture of a good, even though the cost of the tax is ultimately passed along to the final consumer and included in the product's price. In this case, the manufacturer is affected while the consumer is affected by the incidence.
Tax Shifting: Shifting the burden (payment) of a tax from one person to another is known as tax shifting. For instance, in the GST scenario, the final recipient of the tax is the consumer rather than the producer. The manufacturer transferred the cost of the taxes to the final consumer.