The tax incidence shows who pays the tax and how the tax burden is shared among buyers and sellers. As it is seen above the tax incidence is not affected by whether the tax is levied on buyers or sellers. It does not matter who pays the tax to government, the burden is shared by buyers and sellers. What determines the tax incidence? How is the burden of tax shared? The answer to this question is elasticity, specifically, the price elasticities of demand and supply. In general, it can be said that a tax burden goes more heavily on the side of the market that is less price elastic