Which principle of taxation holds that people with greater economic capacity should contribute more to public revenue?
Correct answer: A. The ability-to-pay principle
- A. The ability-to-pay principle
- B. The benefit principle
- C. The neutrality principle
- D. The certainty principle
Explanation
The ability-to-pay principle relates tax contributions to income, wealth, or economic capacity. The benefit principle instead links payment to the benefits received from public services.
Last updated
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.
Practise Public Finance
38 free Public Finance MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Economics questions like this
Economics is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.