If the demand for a good is highly elastic, a tax imposed on that good will primarily burden the producers rather than the consumers.

When the demand for a good is highly elastic, it means that consumers are very sensitive to changes in price. If the price of the good goes up because of a tax, many consumers will buy much less or switch to other products. This reaction makes it hard for producers to pass the tax cost onto consumers through higher prices. Instead, producers may have to absorb most of the tax burden to keep their sales up. For example, if a soda company faces a tax that raises prices, and consumers quickly choose water instead, the company will lose sales and profits, making it harder for them to pass on the tax to buyers.