Question

Economy is listed as one criteria of a good tax system. What is meant by economy in this context?

A) Economy requires that the system should minimize compliance and administration costs.
B) Economy requires that the tax burden should be distributed across taxpayers fairly.
C) Economy requires that tax revenues generated are adequate to meet the financial needs of the government.
D) Economy requires that taxpayers should be able to determine when, where, and how to calculate and pay the tax.
E) Economy requires that a tax system should be designed to facilitate the collection of tax revenue without undue hardship.

Answer 1

Economy in the context of tax systems means that the system should minimize costs related to compliance and administration, ensuring cost-effectiveness in operating the tax system. So, the correct option is A.

Step-by-step explanation:

In the context of tax systems, economy refers to the idea that tax systems should minimize the costs related to compliance and administration. This means that a good tax system should not be expensive to operate or to comply with. It is essential that the costs associated with collecting taxes do not become a burden on the government or taxpayers, thereby ensuring that more of the revenue collected can be used for public spending and investment, rather than being consumed by the process of taxation itself.

Therefore, A. Economy requires that the system should minimize compliance and administration costs is the correct one.