When the proportion of indirect taxes in total tax revenue is very high, it leads to : i. Higher tax…
A heavy reliance on indirect taxes places a relatively greater burden on the poor and can raise the price level. Poorer households typically spend a larger share of their…
Choose your answer
When the proportion of indirect taxes in total tax revenue is very high, it leads to :
i. Higher tax burden on the rich
ii. Higher tax burden on the poor
iii. Rise in the price level
iv. Fall in tax revenues
Answer and explanation
Correct answer B
A heavy reliance on indirect taxes places a relatively greater burden on the poor and can raise the price level. Poorer households typically spend a larger share of their income on consumption, and indirect taxes can be passed on through prices. A fall in total tax revenue does not necessarily follow.
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Jammu & Kashmir and Ladakh SET (JKSET/LASET)