Taxation Theories: Ability to Pay and Cost Allocation
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Questions and Answers

What is the principle behind the Ability to Pay Theory in taxation?

  • The government's power to impose taxes without restrictions
  • The government's ability to collect taxes efficiently
  • The taxpayer's ability to pay taxes based on their income level (correct)
  • The fairness of taxation based on the benefits received
  • What type of equity is concerned with fairness among individuals with different income levels?

  • Benefit Received Theory
  • Ability to Pay Theory
  • Vertical Equity (correct)
  • Horizontal Equity
  • What type of tax is imposed on the transfer of properties by a living donor?

  • Income Tax
  • Estate Tax
  • Value Added Tax
  • Donor's Tax (correct)
  • Which type of tax is a consumption tax collected by VAT-registered businesses?

    <p>Value Added Tax</p> Signup and view all the answers

    What is the principle behind the Horizontal Equity concept?

    <p>Fairness among individuals with similar income levels and circumstances</p> Signup and view all the answers

    Which type of tax is imposed on annual income, gains, or profits?

    <p>Income Tax</p> Signup and view all the answers

    What is the primary purpose of taxation?

    <p>To raise revenue for the support of the government</p> Signup and view all the answers

    Which theory of taxation presupposes that the more benefits you receive from the government, the more taxes you should pay?

    <p>Benefit Received Theory</p> Signup and view all the answers

    What is the basis of taxation established on?

    <p>The principle of necessity</p> Signup and view all the answers

    Which of the following is NOT a secondary purpose of taxation?

    <p>To collect revenue for the support of the government</p> Signup and view all the answers

    Which theory of taxation presupposes that taxpayer should be taxed based on their relative capacity to pay?

    <p>Ability to Pay Theory</p> Signup and view all the answers

    What is the main idea behind the principle of reciprocal duties?

    <p>The government provides benefits to the people and the people provide the funds</p> Signup and view all the answers

    What is the primary purpose of taxation as a state power?

    <p>To raise revenue for public purposes</p> Signup and view all the answers

    Which theory of taxation suggests that individuals should be taxed based on the benefits they receive from the government?

    <p>Benefit Received Theory</p> Signup and view all the answers

    What is the principle of vertical equity in taxation?

    <p>Higher tax rates for higher-income individuals</p> Signup and view all the answers

    What is the principle of horizontal equity in taxation?

    <p>Equal tax rates for all individuals with similar income</p> Signup and view all the answers

    Which theory of taxation suggests that individuals should be taxed based on their ability to pay?

    <p>Ability to Pay Theory</p> Signup and view all the answers

    What is the primary purpose of taxation as a mode of cost distribution?

    <p>To allocate costs to those who benefit from government spending</p> Signup and view all the answers

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