We should not have a tax system which encourages investment in particular assets or in particular areas of the country.This statement reflects which of the following qualitative characteristics of an effective tax system?
A)Neutrality.
B)Horizontal equity.
C)Simplicity.
D)Elasticity.

Question

Quizplus · Accepted Answer

The statement reflects the principle of Neutrality, which refers to an effective tax system being impartial and not showing any bias towards particular activities or regions of the country. This ensures that investors make decisions based on economic factors rather than tax incentives, which can distort the market and impact economic efficiency.

We Should Not Have a Tax System Which Encourages Investment