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What is the advantage of a broad tax base?

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What is the advantage of a broad tax base?

The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates.

What are the features of tax?

Characteristics of Tax:

  • Basic Characteristics of a Tax:
  • Commercial Revenue and Income from Public Domain:
  • Administrative Revenue:
  • Grants and Gifts:
  • Public Borrowing:
  • Revenue Aspect:
  • Regulatory Objective:
  • Taxation as a Means of Regulating the Level of National Income:

What are the five features of tax?

Principles of a Good Tax System

  • Equity. Tax should be based on a person’s ability to pay and there should be equality of sacrifice, that is, the burden of tax should be according to one’s ability.
  • Certainty.
  • Convenience.
  • Economy.
  • Impartiality.
  • Flexibility.
  • Simplicity.
  • Easy to Collect.
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Which of these is are features of progressive taxes?

(1) When tax imposition leads to a disproportionate increase in prices by an extent more than the rise in the tax. (2) When tax imposition leads to a disproportionate decrease in prices by an extent more than the rise in the tax. (3) When tax imposition leads to a disproportionate decrease in imports.

Why VAT is broad-based tax?

As discussed, a non-exemption VAT would avoid the cascading problem and thus would not generate distortion in production. In addition, a broad-based VAT minimizes deadweight loss inherent in any type of indirect tax.

What is meant by broadening tax base?

Base broadening is the expansion of the amount of economic activity subject to tax, usually by eliminating exemptions, exclusions, deductions, credits, and other preferences.

What are the main features of indirect tax?

Here are the key features of indirect taxes:

  • Tax liability: The service provider or seller pays indirect taxes to the government, and the liability is transferred to the consumer.
  • Payment of tax: The seller pays indirect taxes to the government and the same is transferred to the consumer.
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What are the major features of Indian tax system?

The important taxes levied by the union government are income tax, corporation tax, central excise duties, wealth tax, gift tax, custom duties etc. ADVERTISEMENTS: The state governments main taxes are land revenue, sale tax, state excise duties entertainment tax, stamp and registration duties etc.

What are 4 characteristics of a good tax?

The principles of good taxation were formulated many years ago. In The Wealth of Nations (1776), Adam Smith argued that taxation should follow the four principles of fairness, certainty, convenience and efficiency.

What is the base of VAT?

Value Added Tax (VAT) In principle, the tax base of a value-added tax (VAT) is all consumption. Most VAT systems, however, exclude certain items from taxation. Some items (e.g., food and prescription drugs) are excluded to reduce the impact of the tax on low-income households.