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JAMB Economics 2006 Question 3

Question 3

Public Finance

Personal income tax as a source of government revenue is increased when the

  1. A.tax rate is raised
  2. B.tax system is proportional
  3. C.retirement age is reduced
  4. D.tax base is contracted
Show the answer and explanation

Answer: A (tax rate is raised)

Explanation

Raising the tax rate means each taxpayer pays more on the same income, so revenue from personal income tax rises.