Question

Taxation is anti inflationary if tax is imposed on

a) Essential items

b) luxuries

c) investment

d) consumption​

Answer 1

Answer:

I hope this is the correct answer.

Explanation:

a) Essential items

Answer 2

Taxation is anti inflationary if tax is imposed on

a) Essential items

b) luxuries

c) investment

d) consumption​

The correct answer is :

a) Essential items

Explanation :

If a tax is imposed on essential goods, then this taxation is said to be anti-inflationary, because levying essential goods will only increase their prices, which will increase the inflationary pressure because people will be compelled to buy these.

The rate of inflation can be controlled by taxing luxury goods, investment and consumption items. But taxing life essentials becomes anti-inflationary. Taxes on luxury goods reduce inflationary pressures by charging people more money from the extra income. Similarly, it is appropriate to tax to a limited extent on goods of investment and general consumption.

#SPJ3