Question

The government used to charge a wealth tax which was levied on properties owned by the richer sections of the society. But the government stopped collecting this tax. Identify the reason for this.

• A. The cost of collecting this tax was less than the tax collected.
• B. The income from these taxes was not sufficient.
• C. The number of wealthy people was less.
• D. The cost of collecting this tax was more than the tax collected.

Answer 1

The correct option is D The cost of collecting this tax was more than the tax collected.

The government collected taxes directly from the individuals in the form of direct taxes. One such tax is the wealth tax. It was levied on properties owned by the wealthier sections of the society. However, it was abolished because the cost of collecting this tax was more than the tax collected.