The incidence of specific indirect taxes refers to the way in which the economic burden of such taxes is distributed between producers (sellers) and consumers (buyers). Specific indirect taxes are fixed levies imposed per unit of a good or service, such as excise duties on tobacco or fuel.

The tax incidence depends on the relative price elasticities of demand and supply. In general, the burden falls more heavily on the side of the market (demand or supply) that is less elastic, as that side is less responsive to price changes.

• If demand is relatively price elastic, consumers reduce their purchases sharply in response to price increases, forcing producers to absorb a larger share of the tax to maintain sales volume.
• If demand is relatively price inelastic, consumers continue buying similar quantities despite higher prices, meaning they bear a greater portion of the tax burden.
• Similarly, inelastic supply means producers cannot easily adjust output and thus shoulder more of the tax, while elastic supply allows producers to pass on more of the burden to consumers.