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Question
The government imposes tax ______.
Options
To raise revenue
To reduce inequalities of income and wealth
Both to raise revenue and to reduce inequalities of income and wealth
Neither to raise revenue nor to reduce inequalities of income and wealth
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Solution
Both to raise revenue and to reduce inequalities of income and wealth.
Explanation:
- The government imposes taxes to raise revenue for funding public services, infrastructure, and other government activities.
- Taxes are also used to reduce inequalities of income and wealth by redistributing wealth through progressive taxation and social welfare programs.
RELATED QUESTIONS
______ are those taxes which are paid by the same person on whom they have been imposed.
Which of the following is an advantage of direct taxes?
Fiscal policy means public expenditure and tax policy of the government.
The following table indicates:
| Tax Base in ₹ | Rate of tax in % |
| 10,000 | 8 |
| 20,000 | 8 |
| 30,000 | 8 |
| 40,000 | 8 |
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 |
Match the following:
| Column I | Column II | ||
| A. | Impact of tax | (i) | Price stability |
| B. | Incidence of tax | (ii) | Simple to calculate |
| C. | Objective of Monetary Policy | (iii) | Ultimate burden of tax |
| D. | Proportional tax | (iv) | Original imposition of tax |
State the difference between income tax and expenditure tax.
Citing reason state the advantage of a direct tax over an indirect tax.
How does the state fulfil the following socio-economic objective?
Promoting industrial growth.
Three demerits of an Indirect tax.
