Taxation Quiz

What is the main purpose of taxation in an economy?

• To reduce exports

• To increase inflation

• To raise revenue for government spending

• To eliminate inequality completely

Which of the following is an example of a direct tax?

• VAT

• Import duty

• Income tax

• Excise duty

Which tax is paid at the point of sale on goods and services?

• Income tax

• Corporate tax

• VAT (Value Added Tax)

• Inheritance tax

Which statement best defines a progressive tax?

• Everyone pays the same amount of tax

• Higher income earners pay a higher percentage of tax

• All goods are taxed equally

• Lower income earners pay more than higher income earners

Which type of tax is considered regressive in nature?

• Property tax

• Income tax

• Value Added Tax (VAT)

• Capital gains tax

In which country is a flat income tax system currently used?

• United States

• Germany

• Estonia

• Japan

Which tax is based on an individual's ability to pay?

• Indirect tax

• Proportional tax

• Progressive tax

• Import duty

What is the key difference between direct and indirect taxes?

• Direct taxes are easier to avoid

• Indirect taxes are based on wealth

• Direct taxes are paid directly to the government

• Indirect taxes are charged on profits

What makes a proportional tax system unique?

• Tax rate decreases with income

• Tax rate is the same for all income levels

• Only low-income earners pay tax

• It's used only in developing countries

Which of the following taxes is commonly used to discourage consumption of demerit goods?

• Income tax

• Excise duty

• Corporate tax

• Customs duty