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6 marksTaxation and Fiscal Policy

CSEC Principles of Business · January 2012 · Paper 2 · Question 6(c)(iii)

A Minister of Finance increases taxes on alcohol and tobacco, leading a commentator to describe the measure as regressive.

Discuss TWO reasons why a government may impose taxes on alcohol and tobacco.

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Other parts of this question

  1. 6(a)Explain the terms 'direct taxes' and 'indirect taxes', giving ONE example of EACH type of tax.[6 marks]
  2. 6(b)State TWO purposes of taxation.[2 marks]
  3. 6(c)(i)Distinguish between 'regressive taxation' and 'progressive taxation'.[4 marks]
  4. 6(c)(ii)Outline the MAIN reason in favour of a progressive tax system.[2 marks]

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