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Question
Explain briefly two merits of indirect tax.
Answer in Brief
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Solution
Merits of indirect tax are as follows:
- Indirect taxes are convenient to pay because they are paid in small amounts and are included in the price of the commodity. Taxpayers do not feel the burden of these taxes.
- Indirect taxes can be used to increase social welfare. The consumption of goods which are undesirable and harmful such as wine, cigarettes, etc. can be discouraged by imposing heavy taxes on them.
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Role of State in Economic Development
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Chapter 6: The State and Economic Development - QUESTION BANK [Page 187]
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