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.

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Chapter11: Fiscal Policy And The Federal Budget
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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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