Assertion (A): Direct taxes are better suited than indirect taxes to reducing inequality.
Reason (R): Direct taxes such as income tax can charge higher rates on higher incomes.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

An indirect tax charges the same on a packet of salt whoever buys it, so it falls harder on the poor.
A progressive direct tax takes more from the rich. R explains A.

Concept: Taxes and equity
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsDirect and indirect taxes

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Ten questions from Government Budget: Receipts & Expenditure, at your own pace.

Assertion (A): Direct taxes are better suited than indirect taxes to reducing inequality.Reason (R): Direct taxes such as income tax can charge higher rates on higher incomes.

Explanation

Assertion (A): Direct taxes are better suited than indirect taxes to reducing inequality.
Reason (R): Direct taxes such as income tax can charge higher rates on higher incomes.