Question

The difference between a value-added tax and a flat tax is


The difference between a value-added tax and a flat tax is

 a. a value-added tax is progressive, while a flat tax is proportional,

 b. a value-added tax is vertically equitable, while a flat tax is horizontally equitable.

 c. a value-added tax satisfies the ability-to-pay principle, while a flat tax satisfies the benefits principle.

 d. There is essentially no difference between a value-added tax and a flat tax 

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Answer #1

Answer: ( A)

Value-added tax is imposed on the value created, this is regarded as progressive tax while the flat tax is imposed equally on all. Thus it is the proportional tax.

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Answer #2

ANSWER :


Option b. 


Explanation :


Flat tax is a fixed percentage of tax on income irrespective of the level of income. Hence it is proportional tax or horizontally equitable. 


Value-added tax is also a flat tax but levied on the goods and services for the value added at every point of sale.  Hence, it is vertically equitable. 

answered by: Tulsiram Garg
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