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JAMB Economics 1993 Question 38

Question 38

Public Finance

Which of the following are the major disadvantages of direct system of taxation?
I. Disincentive to hardwork
II. Difficulties in assessment and collection
III. Imperfections in tax assessment.

  1. A.I and II
  2. B.I and III
  3. C.II and III
  4. D.I, II and III
Show the answer and explanation

Answer: D (I, II and III)

Explanation

Direct taxes such as income tax can discourage people from working harder, are difficult and costly to assess and collect, and are often assessed imperfectly (allowing evasion). All three are disadvantages.