Taxation and Tax Policy Quiz

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Questions and Answers

What is the main purpose of taxes?

To fund general expenditure for the benefit of society (correct)
To destabilize the government
To burden citizens financially
To discourage economic growth

How is tax base determined?

By imposing high tax rates
By following relevant legislative provisions (correct)
By randomly selecting amounts
By excluding all economic income

What does tax policy aim to achieve?

To benefit only the wealthy individuals
To ensure government objectives are met (correct)
To reduce government revenue
To confuse citizens about their tax liabilities

Which factor is NOT considered in formulating the appropriate tax policy?

Tax enforcement mechanisms (C) Signup and view all the answers

Why are amounts included in the tax base not always the same as economic income?

Due to different legislative provisions (B) Signup and view all the answers

What is the main purpose of taxes?

To raise revenue in order to fund general expenditure, such as education, health, and housing, for the benefit of the society as a whole. Signup and view all the answers

How is tax base defined?

The amount on which tax is imposed, determined by applying relevant legislative provisions. Signup and view all the answers

What are tax policies formulated for?

To determine the appropriate level of tax to be imposed, ensuring that government objectives are achieved. Signup and view all the answers

What should be considered in formulating the appropriate tax policy?

The tax base, the tax rate structure, and the incidence of the tax liability. Signup and view all the answers

Why are amounts included in the tax base not always the same as economic income?

Because existing legislative provisions indicate what should be included and excluded from the tax base, which may differ from economic income. Signup and view all the answers