Question

When the rates of income tax and sales tax are high, the major portion of the earnings of people goes to the government exchequer and very little remains with people to save and invest.

• A. True
• B. False

Answer 1

The correct option is A True

When high rate of taxes (income tax and sales tax) are imposed by the government ,the real income of the consumers go down and hence the purchasing power falls so in turn savings of the people falls accordingly.