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A tax is characterised by horizontal equity if its liability is
- a)proportional to the income of tax payers
- b)similar for tax payers in similar circumstances
- c)proportional to the expenditure of tax payers
- d)the same for every tax payer
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
A tax is characterised by horizontal equity if its liability is a)...
The principle of equity includes both horizontal and vertical. Equity is determined by first assessing an individual’s ability-to-pay. The idea of the abilityto-pay principle considers whether or not it is fair to tax someone higher just because that person has the ability and resources to pay. If it is decided that they should be required to pay more, the question of how much more arises. These questions can be analyzed through horizontal and vertical equity which are subsets of the ability-to-pay principle. Horizontal equity suggests it is fair for people of equal ability to pay the same amount in taxes. Vertical equity is the idea that people who has a higher ability to pay more than those who have a lower ability to pay, as long as the increase in tax level is considered to be reasonable.
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A tax is characterised by horizontal equity if its liability is a)...
Horizontal Equity in Taxation:
Horizontal equity in taxation refers to the principle that individuals in similar financial situations should be treated similarly in terms of their tax liability. This principle ensures fairness and equality in the tax system.
Explanation:
Proportional to the income of tax payers:
- Horizontal equity is achieved when the tax liability is proportional to the income of taxpayers. This means that individuals with similar levels of income should pay a similar amount of tax.
- For example, if two individuals have the same income, they should have the same tax liability under a system that adheres to horizontal equity.
Similar for tax payers in similar circumstances:
- Horizontal equity also requires that taxpayers in similar circumstances should face a similar tax burden.
- This ensures that individuals with comparable financial situations are treated equally in terms of taxation.
Proportional to the expenditure of tax payers:
- Horizontal equity is not based on the expenditure of taxpayers but on their ability to pay, which is typically reflected in their income.
- Therefore, taxing based on expenditure does not necessarily align with the principle of horizontal equity.
The same for every tax payer:
- If the tax liability is the same for every taxpayer regardless of their income or financial situation, it does not reflect horizontal equity.
- Horizontal equity requires that tax liabilities are based on the taxpayer's ability to pay, which is usually tied to their income level.
In conclusion, horizontal equity in taxation is achieved when the tax liability is proportional to the income of taxpayers and is similar for taxpayers in similar circumstances. This principle ensures fairness and equality in the tax system by treating individuals with similar financial situations equally.
Horizontal equity in taxation refers to the principle that individuals in similar financial situations should be treated similarly in terms of their tax liability. This principle ensures fairness and equality in the tax system.
Explanation:
Proportional to the income of tax payers:
- Horizontal equity is achieved when the tax liability is proportional to the income of taxpayers. This means that individuals with similar levels of income should pay a similar amount of tax.
- For example, if two individuals have the same income, they should have the same tax liability under a system that adheres to horizontal equity.
Similar for tax payers in similar circumstances:
- Horizontal equity also requires that taxpayers in similar circumstances should face a similar tax burden.
- This ensures that individuals with comparable financial situations are treated equally in terms of taxation.
Proportional to the expenditure of tax payers:
- Horizontal equity is not based on the expenditure of taxpayers but on their ability to pay, which is typically reflected in their income.
- Therefore, taxing based on expenditure does not necessarily align with the principle of horizontal equity.
The same for every tax payer:
- If the tax liability is the same for every taxpayer regardless of their income or financial situation, it does not reflect horizontal equity.
- Horizontal equity requires that tax liabilities are based on the taxpayer's ability to pay, which is usually tied to their income level.
In conclusion, horizontal equity in taxation is achieved when the tax liability is proportional to the income of taxpayers and is similar for taxpayers in similar circumstances. This principle ensures fairness and equality in the tax system by treating individuals with similar financial situations equally.
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A tax is characterised by horizontal equity if its liability is a)proportional to the income of tax payers b)similar for tax payers in similar circumstances c)proportional to the expenditure of tax payers d)the same for every tax payerCorrect answer is option 'A'. Can you explain this answer?
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A tax is characterised by horizontal equity if its liability is a)proportional to the income of tax payers b)similar for tax payers in similar circumstances c)proportional to the expenditure of tax payers d)the same for every tax payerCorrect answer is option 'A'. Can you explain this answer? for BPSC (Bihar) 2025 is part of BPSC (Bihar) preparation. The Question and answers have been prepared according to the BPSC (Bihar) exam syllabus. Information about A tax is characterised by horizontal equity if its liability is a)proportional to the income of tax payers b)similar for tax payers in similar circumstances c)proportional to the expenditure of tax payers d)the same for every tax payerCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for BPSC (Bihar) 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A tax is characterised by horizontal equity if its liability is a)proportional to the income of tax payers b)similar for tax payers in similar circumstances c)proportional to the expenditure of tax payers d)the same for every tax payerCorrect answer is option 'A'. Can you explain this answer?.
A tax is characterised by horizontal equity if its liability is a)proportional to the income of tax payers b)similar for tax payers in similar circumstances c)proportional to the expenditure of tax payers d)the same for every tax payerCorrect answer is option 'A'. Can you explain this answer? for BPSC (Bihar) 2025 is part of BPSC (Bihar) preparation. The Question and answers have been prepared according to the BPSC (Bihar) exam syllabus. Information about A tax is characterised by horizontal equity if its liability is a)proportional to the income of tax payers b)similar for tax payers in similar circumstances c)proportional to the expenditure of tax payers d)the same for every tax payerCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for BPSC (Bihar) 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A tax is characterised by horizontal equity if its liability is a)proportional to the income of tax payers b)similar for tax payers in similar circumstances c)proportional to the expenditure of tax payers d)the same for every tax payerCorrect answer is option 'A'. Can you explain this answer?.
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