WAEC Economics 1991 (August) Question 35

Question 35

Public Finance

A tax is said to be good when

  1. A.it yields more revenue to the state at the expense of the people's ability to pay
  2. B.the cost of collecting it is equal to the revenue it generates
  3. C.it is imposed so suddenly that no one can dodge its payment
  4. D.its payment causes minimum inconvenience to the tax payer
  5. E.it induces workers to prefer more leisure to extra work.
Show the answer and explanation

Answer: D (its payment causes minimum inconvenience to the tax payer)

Explanation

Convenience is one of Adam Smith's canons of a good tax: it should be easy and convenient to pay.