An earmarked tax is a tax whose revenue is:
Correct answer: B. Reserved for a specified public programme
- A. Transferred entirely to foreign creditors
- B. Reserved for a specified public programme
- C. Collected only from public corporations
- D. Automatically excluded from the annual budget
Explanation
Earmarked revenue is legally or administratively assigned to a particular purpose, such as road construction or social insurance. It is still public revenue and does not automatically fall outside the budget process.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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