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    Question

    Which of the following statements are correct?

    1. Ability to pay principle of taxation holds that the amount of taxes people pay should relate to their income or wealth

    2. The Benefit Principle of taxation states that individuals should be taxed in proportion to the benefit they receive from Government programmes

    3. A progressive tax takes a larger share of tax from poor families than it does from rich families

    4. Indirect taxes have the advantage of being cheaper and easier to collect

    Select the correct answer using the code given

    A 1 and 3 only Correct Answer Incorrect Answer
    B 2 and 4 only Correct Answer Incorrect Answer
    C 1, 2 and 4 only Correct Answer Incorrect Answer
    D 1, 2, 3 and 4 Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    A progressive tax receives a larger percentage from the income of higher earners than it acts from low income person.

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