Identify the tax imposed by the government that do not depend on income.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Lump-sum tax.
A lump-sum tax is a fixed amount of tax imposed by the government that does not vary with income, output, or consumption.
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Every taxpayer pays the same absolute amount, regardless of how much they earn or spend.
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It is non-distortionary, meaning it does not affect economic decisions related to work or production.
In contrast:
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Indirect tax depends on expenditure (e.g., GST).
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Proportional tax depends on income at a constant rate.
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Corporate tax depends on company income or profits.