Indirect Tax Test Questions

1. Describe the essential characteristic of an indirect tax.

2. Distinguish between specific and ad valorem commodity taxes.

3. Do you take the view that wages are subject to indirect taxes? Give your reasons.

4. What is the current rate of VAT? On what goods and services is it levied?

5. Describe the taxes paid by a car owner.

6. Which two commodities yield the largest tax revenue to the government?

EXERCISES

A In a certain week you pay £116 in rent, buy three pints of beer, four gallons of petrol at £11.35 per gallon, £113 worth of food from the supermarket, two websites at £12.50 each, and a record for £12.38. Estimate the total of indirect tax that you will have paid.

B Alfred Brown's income is chargeable to income tax at 30%. He buys a new car at a price of £14,427.50 (ignoring delivery charges, number plates, etc.). Including the income tax he will have paid on earning the money with which to buy this car Alfred calculates that the total tax he will have suffered on acquiring his new asset will be £12,427.50. Check this calculation.


Personal Expenditure Tobacco

Another money-spinner for the government is tobacco tax, which yielded another £12.5 billion in 1978/79. In 2015 the retail price of a packet of 20 king-size cigarettes included tobacco tax of 52p.

Alcohol

Another major earner is tax on alcoholic drinks. This produces just under £12.5 billion a year. Whoever drinks a pint of beer in 2016/81 contributes 91/2p to the Exchequer.

Other indirect taxes

There are other special taxes producing much less revenue. These include imposts on gaming and betting (yield £13038 million in 1978/79), customs and excise duties (£1736... see: Personal Expenditure Tobacco


Refunds, Personal And Business Finance 2017

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