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Question Three a) Explain what is meant by equity in taxation from the ideal tax policy design perspective. b) Briefly discuss equity under the following headings: i. Horizontal equity versus vertical equity; ii. Benefits principle versus ability to pay principle; Income taxes versus Product taxes. c) Establish a clear link between equity and public expenditure. Page 2 of 3 Question Four The X Revenue Authority collected US$ 2148 million at the end of 2009 broken down as follows: Company Tax $301; Excise Duty $304 million; windfall tax $28; Import VAT $587 million; Pay As You Earn (PAYE) $562; Export Duties $42 million; Mineral Royalty $53 million; Domestic VAT $-96 million; Import Duties $267 million; and Withholding Tax $100 million. a) Compute how much the Authority collected in: i) Direct Taxes ii) Indirect Taxes b) It is often argued that direct taxes are better than indirect taxes. Briefly explain this argument.

Question Three a) Explain what is meant by equity in taxation from the ideal tax policy design perspective. b) Briefly discuss equity under the following headings: i. Horizontal equity versus vertical equity; ii. Benefits principle versus ability to pay principle; Income taxes versus Product taxes. c) Establish a clear link between equity and public expenditure. Page 2 of 3 Question Four The X Revenue Authority collected US$ 2148 million at the end of 2009 broken down as follows: Company Tax $301; Excise Duty $304 million; windfall tax $28; Import VAT $587 million; Pay As You Earn (PAYE) $562; Export Duties $42 million; Mineral Royalty $53 million; Domestic VAT $-96 million; Import Duties $267 million; and Withholding Tax $100 million. a) Compute how much the Authority collected in: i) Direct Taxes ii) Indirect Taxes b) It is often argued that direct taxes are better than indirect taxes. Briefly explain this argument.

Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Design Of The Tax System
Section: Chapter Questions
Problem 3CQQ
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Question Three a) Explain what is meant by equity in taxation from the ideal tax policy design perspective. b) Briefly discuss equity under the following headings: i. Horizontal equity versus vertical equity; Benefits principle versus ability to pay principle; iii. Income taxes versus Product taxes. c) Establish a clear link between equity and public expenditure. Page 2 of 3 Question Four The X Revenue Authority collected US$ 2148 million at the end of 2009 broken down as follows: Company Tax $301; Excise Duty $304 million; windfall tax $28; Import VAT $587 million; Pay As You Earn (PAYE) $562; Export Duties $42 million; Mineral Royalty $53 million; Domestic VAT $ - 96 million; Import Duties $267 million; and Withholding Tax $100 million. a) Compute how much the Authority collected in: i) Direct Taxes ii) Indirect Taxes b) It is often argued that direct taxes are better than indirect taxes. Briefly explain this argument.
Transcribed Image Text:Question Three a) Explain what is meant by equity in taxation from the ideal tax policy design perspective. b) Briefly discuss equity under the following headings: i. Horizontal equity versus vertical equity; Benefits principle versus ability to pay principle; iii. Income taxes versus Product taxes. c) Establish a clear link between equity and public expenditure. Page 2 of 3 Question Four The X Revenue Authority collected US$ 2148 million at the end of 2009 broken down as follows: Company Tax $301; Excise Duty $304 million; windfall tax $28; Import VAT $587 million; Pay As You Earn (PAYE) $562; Export Duties $42 million; Mineral Royalty $53 million; Domestic VAT $ - 96 million; Import Duties $267 million; and Withholding Tax $100 million. a) Compute how much the Authority collected in: i) Direct Taxes ii) Indirect Taxes b) It is often argued that direct taxes are better than indirect taxes. Briefly explain this argument.
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