Taxation Theories: Ability to Pay and Cost Allocation

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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?

Value Added Tax Signup and view all the answers

What is the principle behind the Horizontal Equity concept?

Fairness among individuals with similar income levels and circumstances Signup and view all the answers

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

Income Tax Signup and view all the answers

What is the primary purpose of taxation?

To raise revenue for the support of the government 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?

Benefit Received Theory Signup and view all the answers

What is the basis of taxation established on?

The principle of necessity Signup and view all the answers

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

To collect revenue for the support of the government Signup and view all the answers

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

Ability to Pay Theory Signup and view all the answers

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

The government provides benefits to the people and the people provide the funds Signup and view all the answers

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

To raise revenue for public purposes 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?

Benefit Received Theory Signup and view all the answers

What is the principle of vertical equity in taxation?

Higher tax rates for higher-income individuals Signup and view all the answers

What is the principle of horizontal equity in taxation?

Equal tax rates for all individuals with similar income Signup and view all the answers

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

Ability to Pay Theory Signup and view all the answers

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

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