ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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citizens who will benefit from the use of the tax will pay for it
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a citizen will pay more tax if he or she is able to pay more.
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Either A or B
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None of the above
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Detailed explanation-1: -According to the benefit principle of taxation those who reap the benefits from government services should pay the taxes. The benefit principle holds that people should be taxed in proportion to the benefits they receive from goods and services provided by the government.
Detailed explanation-2: -The ability-to-pay Principle of taxation maintains that taxes should be levied according to a taxpayer’s ability to pay. Accordingly, the principle holds that those individuals, businesses, and corporations with greater ability to pay taxes-measured by income and wealth-should pay more.
Detailed explanation-3: -An example of the cost benefit principle can be seen when an individual is deciding whether to purchase a video game. If the cost of the game is $100 and there is another store which is selling it for $80, the individual should only buy the game if the cost of travelling to the other store is less than $20.
Detailed explanation-4: -Lindahl also developed the benefit principle in taxation, described in his book Die Gerechtigkeit der Besteuerung (1919; “The Justness of Taxation”). That principle holds that each person’s share of taxes paid for government-provided goods and services should equal the share of benefits each person receives.
Detailed explanation-5: -List of qualifying investments under Section 80C Tax Savings* Employee Provident Fund (EPF) & Voluntary Provident Fund (VPF) Public Provident Fund (PPF) Life Insurance Premiums. More items •18-Jun-2020