Question

Which of the following statements is correct?

a. Equity is more important than efficiency as a goal of the tax system.
b. Efficiency is more important than equity as a goal of the tax system.
c Both equity and efficiency are important goals of the tax system.
d. Neither equity nor efficiency is an important goal of the tax system.

Answer 1

Answer: Option c Both equity and efficiency are important goals of the tax system.

Step-by-step explanation:

Taxation means the government collects funds from the people considering their income, assets value, business transactions etc. To make it moderate the government strives to achieve two objectives which is equity and efficiency.

Tax efficiency is done by giving tax codes to reduce the taxes paid by the people. Tax equity is the based on the benefits principle. Benefits principle means the tax payer pay for the benefits used by them such as gas. Both equity and efficiency are required to reduce the tax burden on the tax payers.