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Questions
Explain the term Impact of a tax.
What is meant by impact of taxation?
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Solution
The term impact is used to express the immediate or original imposition of tax. The impact of tax is on the person on whom it is imposed first i.e., the person who is liable to pay tax to the government.
RELATED QUESTIONS
The essential feature of a tax.
______ are those taxes which are paid by the same person on whom they have been imposed.
The government imposes tax ______.
The major objective of monetary policy is ______.
Match the following:
| Column I | Column II | ||
| A. | Direct tax | (i) | Tax rate increases with tax base |
| B. | Indirect tax | (ii) | Tax rate remains constant |
| C. | Proportional tax | (iii) | Imposed on goods and services |
| D. | Progressive tax | (iv) | Impact and incidence lie on the same person |
Classify the following type of tax into direct and indirect taxes:
Sales tax
An indirect tax can be made progressive by imposing higher tax rates on luxuries. Justify the above statement.
Differentiate between progressive and regressive taxes giving an example for each.
Give two examples of direct taxes.
Define the following term:
Fiscal deficit
