Horizontal equity holds that ?
Correct answer: D. those with equal ability to pay should bear equal tax burdens.
- A. those with equal ability to pay should bear unequal tax burdends.
- B. those who benefits the most from government services should bear the higher tax burden.
- C. those who benefit the most from government services should have the greatest voice in determining what gets produced
- D. those with equal ability to pay should bear equal tax burdens.
Explanation
Horizontal equity requires people with equal ability to pay to face equal tax burdens. Treating people differently according to their ability to pay is the principle of vertical equity.
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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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