alleryStart learning →Which of the following is a direct tax?
AService tax
BCorporation tax
CExcise duty
DCustoms duty
Answer & Solution
Correct answer: B. Corporation tax
1. A direct tax falls on the income or profit of the person who pays it.
2. Personal income tax and **corporation tax** are the two main direct taxes.
3. Excise, customs and service tax are levied on goods and services, so they are indirect.
4. The distinction is who bears the burden, not how large the tax is.
_Source: syllabus Introductory Macroeconomics, Ch 5 "Government Budget and the Economy", section 5.1.2 Classification of Receipts_
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