Cima F1 Exam Question No 5

Question No 5:

What is  2 types of incidence?

- Formal incidence: the person who has direct contact with the tax authorities
- Actual incidence: the person who actually ends up bearing the cost of the tax

Cima F1 Exam Question No 4

Question No 4:

What is Tax incidence?

Answer: 

The distribution of the tax burden (who is paying the tax)

Cima F1 Exam Question No 3

Question No 3:

2 types of taxes?

Answer:

1. Direct: imposed directly on the person or enterprise required to pay the tax (tax on personal income, on business profits, on disposal of chargeable assets): income tax, capital gains tax, corporation tax
2. Indirect: imposed on one part of the economy with the intention that the tax burden be passed on to another (sales tax, VAT)

Cima F1 Exam Question No 2

Question No 2:

What are the 3 major principles of good tax policy?

Answer:

1. Equity
2. Efficiency (PAYE system)
3. Economic effects

Cima F1 Exam Question No 1

Question No 1:

Characteristics of a good tax according to Adam Smith

1. Fair (reflect person's ability to pay)
2. Absolute (certain not arbitrary)
3. Convenient (easy to pay)
4. Efficient (low collection costs)