Question

__________ rates of income tax encourage savings and voluntary disclosure of income.

• A. Low
• B. High
• C. Moderate
• D. Nil

Answer 1

The correct option is C Moderate

Since 1991, there has been a continuous reduction in the taxes on individual incomes as it was felt that high rates of income tax were an important reason for tax evasion. It is now widely accepted that moderate rates of income tax encourage savings and voluntary disclosure of income.