Question

Taxation is anti-inflationary if
tax is imposed on​

Answer 1

Answer:

A tax on personal income reduces inflationary pressures by reducing people's disposable income. ... Moreover, a major portion of the tax may be absorbed from savings and thus it may give no direct incentive to curtail spending. Thus, its anti-inflationary effect will be less per rupee than that of a tax on spending.

Explanation:

Answer 2

Answer:

A tax on personal income reduces inflationary pressures by reducing people’s disposable income. It does have a minimum effect on business cost, except to the extent that reductions in disposable income lead trade unions to demand wage increases.

Explanation:

On the contrary, it does not place a burden on persons who do not fall under the tax net or who are able to evade taxes or who spend huge sums from accumulated wealth. Moreover, a major portion of the tax may be absorbed from savings and thus it may give no direct incentive to curtail spending. Thus, its anti-inflationary effect will be less per rupee than that of a tax on spending.