An argument amongst the economists all over the world is going on, on the issue of imposing special taxes on goods and services whose prices do not reflect the true social cost of their consumption, for example, tax on polluting environment. Which of the following are the other examples of such taxes?
A. Duties on cigarettes
B. Duties on alcohol
C. Tax on gambling and lotteries
D. Airport Tax

Only (A)

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Only (A) and (B)

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Only (A), (B) and (C)

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All (A), (B), (C) and (D)

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Solution

The correct option is D Only (A), (B) and (C)
Tax on polluting environment, duties on cigarettes, duties on alcohol and tax on gambling and lotteries- are examples of such taxes whose prices do not reflect the true social cost of their consumption. By incorporating these items, total revenue can be increased.

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