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Consider the following statements regarding Tax Buoyancy:
It is the responsiveness of tax revenue with a change in the tax rate.
Tax buoyancy for the financial year 2020 was lowest in the last decade.
In general, it is high for indirect taxes than direct taxes.
Which of the statements given above is/are correct?
- a)1 only
- b)1 and 3 only
- c)2 and 3 only
- d)2 only
Correct answer is option 'D'. Can you explain this answer?
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Consider the following statements regarding Tax Buoyancy: It is the...
Tax Buoyancy
Tax buoyancy refers to the responsiveness of tax revenue with a change in the tax rate. It measures the degree to which tax revenue increases or decreases in response to changes in the tax base or tax rates. A higher tax buoyancy indicates that tax revenue grows at a faster rate than the overall economy, while a lower tax buoyancy suggests slower growth of tax revenue compared to the economy.
Statement 1: It is the responsiveness of tax revenue with a change in the tax rate.
This statement is correct. Tax buoyancy measures the responsiveness of tax revenue to changes in the tax rate. When tax rates are increased, tax buoyancy measures how much additional revenue is generated as a result of the rate change. Similarly, when tax rates are reduced, tax buoyancy measures the decrease in tax revenue.
Statement 2: Tax buoyancy for the financial year 2020 was lowest in the last decade.
This statement is incorrect. The given statement does not provide any information or data regarding the tax buoyancy for the financial year 2020. Without specific data, it is not possible to determine the tax buoyancy for that particular year.
Statement 3: In general, it is high for indirect taxes than direct taxes.
This statement is correct. In general, tax buoyancy tends to be higher for indirect taxes compared to direct taxes. Indirect taxes are levied on goods and services, such as goods and services tax (GST), sales tax, excise duty, etc. These taxes are embedded in the prices of goods and services and are paid by the consumers when they purchase these goods and services. As the consumption of goods and services tends to be more responsive to changes in income and prices, the tax buoyancy for indirect taxes is often higher.
On the other hand, direct taxes, such as income tax, corporate tax, etc., are levied on individuals and entities directly. These taxes are based on the income or profits earned by individuals or entities. The base for direct taxes is relatively stable and less responsive to changes in income or economic conditions. Therefore, the tax buoyancy for direct taxes is generally lower than indirect taxes.
In conclusion, the correct statements are 1 and 3. Tax buoyancy measures the responsiveness of tax revenue with changes in the tax rate, and in general, it is higher for indirect taxes compared to direct taxes.
Tax buoyancy refers to the responsiveness of tax revenue with a change in the tax rate. It measures the degree to which tax revenue increases or decreases in response to changes in the tax base or tax rates. A higher tax buoyancy indicates that tax revenue grows at a faster rate than the overall economy, while a lower tax buoyancy suggests slower growth of tax revenue compared to the economy.
Statement 1: It is the responsiveness of tax revenue with a change in the tax rate.
This statement is correct. Tax buoyancy measures the responsiveness of tax revenue to changes in the tax rate. When tax rates are increased, tax buoyancy measures how much additional revenue is generated as a result of the rate change. Similarly, when tax rates are reduced, tax buoyancy measures the decrease in tax revenue.
Statement 2: Tax buoyancy for the financial year 2020 was lowest in the last decade.
This statement is incorrect. The given statement does not provide any information or data regarding the tax buoyancy for the financial year 2020. Without specific data, it is not possible to determine the tax buoyancy for that particular year.
Statement 3: In general, it is high for indirect taxes than direct taxes.
This statement is correct. In general, tax buoyancy tends to be higher for indirect taxes compared to direct taxes. Indirect taxes are levied on goods and services, such as goods and services tax (GST), sales tax, excise duty, etc. These taxes are embedded in the prices of goods and services and are paid by the consumers when they purchase these goods and services. As the consumption of goods and services tends to be more responsive to changes in income and prices, the tax buoyancy for indirect taxes is often higher.
On the other hand, direct taxes, such as income tax, corporate tax, etc., are levied on individuals and entities directly. These taxes are based on the income or profits earned by individuals or entities. The base for direct taxes is relatively stable and less responsive to changes in income or economic conditions. Therefore, the tax buoyancy for direct taxes is generally lower than indirect taxes.
In conclusion, the correct statements are 1 and 3. Tax buoyancy measures the responsiveness of tax revenue with changes in the tax rate, and in general, it is higher for indirect taxes compared to direct taxes.
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Consider the following statements regarding Tax Buoyancy: It is the responsiveness of tax revenue with a change in the tax rate. Tax buoyancy for the financial year 2020 was lowest in the last decade. In general, it is high for indirect taxes than direct taxes. Which of the statements given above is/are correct?a)1 onlyb)1 and 3 onlyc)2 and 3 onlyd)2 onlyCorrect answer is option 'D'. Can you explain this answer?
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Consider the following statements regarding Tax Buoyancy: It is the responsiveness of tax revenue with a change in the tax rate. Tax buoyancy for the financial year 2020 was lowest in the last decade. In general, it is high for indirect taxes than direct taxes. Which of the statements given above is/are correct?a)1 onlyb)1 and 3 onlyc)2 and 3 onlyd)2 onlyCorrect answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding Tax Buoyancy: It is the responsiveness of tax revenue with a change in the tax rate. Tax buoyancy for the financial year 2020 was lowest in the last decade. In general, it is high for indirect taxes than direct taxes. Which of the statements given above is/are correct?a)1 onlyb)1 and 3 onlyc)2 and 3 onlyd)2 onlyCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Tax Buoyancy: It is the responsiveness of tax revenue with a change in the tax rate. Tax buoyancy for the financial year 2020 was lowest in the last decade. In general, it is high for indirect taxes than direct taxes. Which of the statements given above is/are correct?a)1 onlyb)1 and 3 onlyc)2 and 3 onlyd)2 onlyCorrect answer is option 'D'. Can you explain this answer?.
Consider the following statements regarding Tax Buoyancy: It is the responsiveness of tax revenue with a change in the tax rate. Tax buoyancy for the financial year 2020 was lowest in the last decade. In general, it is high for indirect taxes than direct taxes. Which of the statements given above is/are correct?a)1 onlyb)1 and 3 onlyc)2 and 3 onlyd)2 onlyCorrect answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding Tax Buoyancy: It is the responsiveness of tax revenue with a change in the tax rate. Tax buoyancy for the financial year 2020 was lowest in the last decade. In general, it is high for indirect taxes than direct taxes. Which of the statements given above is/are correct?a)1 onlyb)1 and 3 onlyc)2 and 3 onlyd)2 onlyCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Tax Buoyancy: It is the responsiveness of tax revenue with a change in the tax rate. Tax buoyancy for the financial year 2020 was lowest in the last decade. In general, it is high for indirect taxes than direct taxes. Which of the statements given above is/are correct?a)1 onlyb)1 and 3 onlyc)2 and 3 onlyd)2 onlyCorrect answer is option 'D'. Can you explain this answer?.
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