types of taxes

The video tutorial explains the two main types of taxes: direct and indirect. Direct taxes, such as income tax, are paid directly to the government and are based on the taxpayer's ability to pay, promoting equality through a progressive tax structure. Indirect taxes, like GST, are levied on goods and services, affecting everyone regardless of income and following a regressive tax structure. The tutorial also discusses the broader impact of taxes on purchasing power, economic behavior, and government incentives, highlighting their role in revenue generation and societal influence.

What is the primary role of taxes in an economy?

• To ensure government can provide essential services

• To promote savings

• To increase consumer spending

• To discourage imports

Which of the following is a characteristic of direct taxes?

• They are transferable

• They promote equality

• They are based on consumption

• They have a regressive structure

What is an example of a direct tax in India?

• Goods and Services Tax (GST)

• Value Added Tax (VAT)

• Customs Duty

• Income Tax

How do indirect taxes affect consumers?

• They are included in the price of goods and services

• They are paid directly by consumers to the government

• They are only applicable to luxury items

• They are based on the ability to pay

What is a regressive tax structure?

• Taxes are based on the value of property

• Lower income individuals pay a higher percentage of their income

• Higher income individuals pay a higher percentage of their income

• Taxes are only applied to imported goods

How can taxes influence consumer behavior?

• By reducing the availability of goods

• By increasing the cost of essential services

• By creating a substitution effect

• By promoting monopolies

What is one way the government can use taxes to promote certain activities?

• By reducing taxes on luxury goods

• By providing tax incentives for specific investments

• By imposing higher taxes on all businesses

• By eliminating all indirect taxes