The tax levied on locally produced goods is

1. Analyze the question The question asks for the name of the tax charged on goods that are produced within the country (locally produced goods).

2. Explain the concept Taxes on goods are named according to what is taxed and where it comes from:

• Import duty: charged on goods brought into the country from abroad.
• Export duty: charged on goods sent out of the country.
• Excise duty: charged on certain goods manufactured or produced within the country, such as cigarettes, beer and soft drinks.
• Company (income) tax: charged on the profits of companies, not on goods.
• Value added tax (VAT): charged on the value added at each stage of production and distribution, on goods and services. It applies to both local and imported goods, so it is not specific to locally produced goods.

3. Step-by-step solution

• Option A, import duty, applies to foreign goods, so it is eliminated.
• Option C, company tax, is on profits, not goods, so it is eliminated.
• Option D, VAT, is a general consumption tax on goods and services, local or imported, so it is not the best fit.
• Option B, excise duty, is specifically the tax on locally produced goods.

4. Answer The correct option is B. excise duty.

5. Exam tip Remember the pair: Import duty = foreign goods coming in; Excise duty = local goods made inside. "Excise" sounds like "exercise within the home", so think of it as inside the country.