Which of the following is an example of a tax following the benefits principle? i. Sales taxes on petrol used to fund road maintenance projects.
Ii) Federal income tax used to provide income support for poorer households.
Iii) Property taxes used to finance public education.

Question

Quizplus · Accepted Answer

The benefits principle states that those who benefit from a particular government service or good should bear the burden of the associated costs. Sales taxes on petrol used to fund road maintenance projects directly link the users of the road with the costs of maintaining it, making it an example of a tax following the benefits principle. Federal income tax used to provide income support for poorer households and property taxes used to finance public education do not directly link the beneficiaries of the services with the costs of providing them, making them less clear examples of the benefits principle.

Which of the Following Is an Example of a Tax