What is meant by the tax base in public finance?
Correct answer: A. The amount on which a tax is calculated
- A. The amount on which a tax is calculated
- B. The agency that collects a tax
- C. The rate charged on taxable income
- D. The period allowed for tax payment
Explanation
The tax base is the income, property, sale, or transaction to which a tax rate is applied. The tax rate determines the share or amount collected, while the collecting agency only administers the tax.
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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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