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Question
The essential feature of a tax.
Options
A compulsory payment
A legal payment
Both Compulsory payment and legal payment.
Neither Compulsory payment nor Legal payment
Solution
Both Compulsory payment and legal payment.
Explanation:
A tax is both a compulsory payment and a legal payment. It is compulsory because it is mandatory for individuals and businesses and legal because taxes are imposed and collected under the authority of the law.
RELATED QUESTIONS
Observe the relationship of the first pair of words and complete the second pair:
Tax paid by person on whose it is imposed : Direct tax.
A tax is paid by some person and the final burden is born by some other person : ______.
A policy under which the government uses its expenditure and revenue to produce desirable effect and avoid undesirable effects on the national income, production and employment. This defines ______.
Which of these taxes is most likely to be progressive?
The tax whose rate remains unchanged irrespective of the income of the taxpayer is called as ______.
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:
Income tax
Give two reasons why the government imposes tax?
Explain how tax can be used as an instrument to regulate consumption and production in an economy.
State the following:
Three demerits of an Indirect tax.
Differentiate between progressive and regressive taxes giving an example for each.
