A tax authority incurs an administrative cost of ₦350,000 to collect ₦500,000 in total rev… — JAMB UTME

A tax authority incurs an administrative cost of $₦350,000$ to collect $₦500,000$ in total revenue from small business owners. Furthermore, the authority requires these business owners to remit their annual tax obligations during their off-season when cash flow is at its lowest point. Which of Adam Smith's canons of taxation are directly violated by this policy?

The canons of economy and convenienceCevap
B
The canons of certainty and equity
C
The canons of economy and certainty
D
The canons of convenience and equity

Cevap

The canons of economy and convenience

The correct answer identifies the canons of economy and convenience. High administrative expenditure (

70\%

of revenue spent on collection) directly breaches the canon of economy, which requires collection costs to be minimal so that the net revenue to the treasury is maximized. Mandating tax remittance during off-peak business periods breaches the canon of convenience, which requires tax collection to align with times when taxpayers have adequate liquidity.

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Analyze the administrative cost aspect of the policy

Spending

₦350,000

to collect

₦500,000

means

70\%

of the gross tax yield is consumed by collection expenses.

The Canon of Economy states that the difference between the money taken out of the pockets of the people and the money brought into the public treasury should be as small as possible.

Analyze the timing of tax collection

Requiring tax remittance during the business off-season creates severe liquidity problems for taxpayers.

The Canon of Convenience dictates that every tax ought to be levied at the time or in the manner in which it is most likely to be convenient for the contributor to pay.

Synthesize the analysis to identify the violated principles

The policy violates the canon of economy (due to excessive administrative overhead) and the canon of convenience (due to poor timing of collection).

Both conditions directly match the classic definitions formulated by Adam Smith.

Anahtar Kavram

Adam Smith's Canons of Taxation (Economy and Convenience)

Tahmini Süre:1m 30s

Soru

Cevap

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