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Under the excise structure described, which category bears the heaviest tax?
APublic goods and services
BLuxuries, tobacco and petroleum
CNecessities of daily life
DSemi-luxuries and comforts
Answer & Solution
Correct answer: B. Luxuries, tobacco and petroleum
1. Necessities are exempted or taxed at low rates.
2. Comforts and semi-luxuries are taxed moderately.
3. **Luxuries, tobacco and petroleum products** are taxed heavily.
4. The graded structure exists so indirect taxation does not fall hardest on the poorest, who spend most on necessities.
_Source: NCERT Class 12 Introductory Macroeconomics, Ch 5 "Government Budget and the Economy", section 5.1.2 Classification of Receipts_
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