Question

Long answer type questions:
Distinguish between: (a) Direct tax and Indirect tax (b) Primary deficit and Revenue deficit.

Answer 1

A direct tax is the one the final burden of which is borne by the person on whom it is imposed. Example: income tax.

An indirect tax is the one the final burden of which can be shifted to other persons. Example: sales tax.

Revenue deficit is related to revenue receipts and revenue expenditure of the government. Revenue deficit is the excess of revenue expenditure over revenue receipts. It does not include items of capital expenditure and capital receipts.

Primary deficit is the difference between fiscal deficit and interest payments.