'Indirect taxes are levied on the producers of goods and services which is indirectly paid by the consumer'
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The Soft Drinks Insustry Levy (Sugar Tax) is a great example of an indirect tax.  The UK government levied a tax upon porducers of high sugar drinks in the hope of cutting consumption.  Whilst the drinks producers are responsible for paying the tax to government, consumers indirectly pay the tax included in the purchase price.

As the tax has to be paid by the producer to the government, the way we would model this is via an increase in frim's unit production costs.  If a firm's costs increase then this would cause a shift inward in supply.  The two diagrams below highlight the two types of indirect tax. Note that both have the smae effect, lower quantity traded and increased price in the market.​

Ad Valorem Indirect Taxes

Ad Valorem Indirect Tax Diagram

• Ad valorem taxes add a percentage to the selling price and therefore at a higher price level the tax added is also higher.
• This causes S2 to have a steeper gradient than S1.
• The diagram can be used to show the incidence or burden of the tax on both the consumer and producer.
• Higher consumer burden causes increased prices.
• Higher producer burden causes decreased profits.
• VAT is the usual example of an advalorem tax (20%).

Unit (Specific) Indirect Taxes

Unit Indirect Tax Diagram

• Unit taxes add a fixed amount of money to the selling price and therefore the tax remains the same at each selling price.
• This causes S2 to have the same gradient as S1.
• The diagram can be used to show the incidence or burden of the tax on both the consumer and producer.
• Higher consumer burden causes increased prices.
• Higher producer burden causes decreased profits.
• SDIL (Sugar tax) is a good example (18p per litre for drinks with 5-8g of sugar per 100ml).