Topic 3

Question 1

Purpose and Principles of Taxation

What is one primary purpose of taxation?
A) To fund political campaigns
B) To collect revenue for public services and infrastructure
C) To promote consumer spending
D) To increase corporate profits

Answer 1

B) To collect revenue for public services and infrastructure

Question 2

Which principle of good taxation emphasizes fairness?
A) Efficiency
B) Simplicity
C) Equity
D) Transparency

Answer 2

C) Equity

Question 3

According to Adam Smith, which of the following should be a characteristic of a good tax?
A) Difficult to understand
B) Clear and certain in terms of quantity and timing
C) Complicated in collection
D) Irregular payment schedule

Answer 3

B) Clear and certain in terms of quantity and timing

Question 4

How do informational videos about taxes affect public perception?
A) They always lead to increased support for all tax types.
B) They can change views on the seriousness of inequality and support for progressive taxation.
C) They have no impact on tax opinions.
D) They solely focus on efficiency without discussing redistribution.

Answer 4

B) They can change views on the seriousness of inequality and support for progressive taxation.

Question 5

What was a major finding regarding public support for inheritance tax after viewing videos?
A) Support for the estate tax increased significantly.
B) There was no change in opinions about inheritance tax.
C) People preferred to eliminate inheritance taxes entirely.
D) Support for the estate tax decreased significantly.

Answer 5

A) Support for the estate tax increased significantly.

Question 6

Why did the French government initially plan to increase the carbon tax?
A) To decrease taxes on wealthy households
B) To fund climate change initiatives
C) To align with EU standards
D) To reduce public debt

Answer 6

B) To fund climate change initiatives

Question 7

What significant event led to the freezing of the carbon tax in France?
A) Economic recession
B) Protests by the ‘Yellow Vests’ movement
C) A successful public awareness campaign
D) International pressure from the EU

Answer 7

B) Protests by the ‘Yellow Vests’ movement

Question 8

How did public perception affect support for the proposed carbon tax reform in France?
A) Most households expected to benefit but did not support it.
B) All households were confident it would reduce pollution.
C) Households were uniformly in favor of the carbon tax.
D) Support was high due to clear understanding of benefits.

Answer 8

A) Most households expected to benefit but did not support it.

Question 9

What is a primary challenge when implementing carbon taxes?
A) Ensuring that all households pay the same amount
B) Overcoming misconceptions about financial impact on households
C) Maintaining high revenue for government spending
D) Preventing businesses from passing on costs

Answer 9

B) Overcoming misconceptions about financial impact on households

Question 10

According to economic theory, what is more effective in changing consumer behavior?
A) Reusable bag bonuses
B) Disposable bag taxes
C) General subsidies
D) Tax exemptions

Answer 10

B) Disposable bag taxes

Question 11

What is a potential downside of a carbon tax perceived by the public?
A) It is seen as an efficient way to reduce pollution.
B) It is viewed as a regressive tax impacting lower-income households more heavily.
C) It is expected to increase disposable income.
D) It leads to higher employment rates.

Answer 11

B) It is viewed as a regressive tax impacting lower-income households more heavily.

Question 12

How have hybrid bans, combining bans with fees, been effective?
A) They have reduced the use of disposable shopping bags significantly.
B) They have increased the sale of disposable bags.
C) They have caused public backlash against retailers.
D) They have led to higher revenues for the government.

Answer 12

A) They have reduced the use of disposable shopping bags significantly.

Question 13

What has been the impact of the plastic bag levy in Ireland?
A) Increased usage of disposable bags
B) A significant reduction in disposable bag usage
C) No change in consumer behavior
D) Increase in public funding for climate projects

Answer 13

B) A significant reduction in disposable bag usage

Question 14

What does the term “tax salience” refer to?
A) The visibility of a tax in pricing and its impact on behavior
B) The overall acceptance of tax policies by the public
C) The effectiveness of tax policies in generating revenue
D) The complexity of tax regulations

Answer 14

A) The visibility of a tax in pricing and its impact on behavior

Question 15

Which argument is primarily used in favor of Pigouvian taxes?
A) They enhance government revenue without affecting behavior.
B) They correct negative externalities by reflecting true social costs.
C) They are simple to implement and understand.
D) They reduce the burden on low-income households.

Answer 15

B) They correct negative externalities by reflecting true social costs.

Question 16

What was one of the key findings regarding supporters of the carbon tax?
A) They consistently underestimated the tax’s impact on their finances.
B) They believed they would lose more than they gained from the tax.
C) They thought the carbon tax would not reduce emissions.
D) They had a clear understanding of the tax’s benefits.

Answer 16

B) They believed they would lose more than they gained from the tax.

Question 17

What was the primary aim of the public awareness campaign associated with the plastic bag levy?
A) To encourage more disposable bag purchases
B) To inform the public about the benefits of reusable bags
C) To promote the financial gains for retailers
D) To reduce the tax burden on consumers

Answer 17

B) To inform the public about the benefits of reusable bags

Question 18

Why is understanding public perception of taxation critical for policymakers?
A) To ensure taxes are collected efficiently
B) To align tax policies with public values and beliefs
C) To minimize the number of taxes imposed
D) To increase compliance among businesses

Answer 18

B) To align tax policies with public values and beliefs

Question 19

What do opponents of the carbon tax often overestimate?
A) The benefits of the tax on the environment
B) The negative financial impact on their households
C) The government’s ability to implement the tax effectively
D) The public support for the tax

Answer 19

B) The negative financial impact on their households

Question 20

What is the main conclusion about people’s attitudes toward taxation from the discussed research?
A) People are generally supportive of all forms of taxation.
B) Redistribution is valued more than efficiency among the public.
C) Most people are indifferent to tax policy discussions.
D) Support for taxation is solely based on economic benefit.

Answer 20

B) Redistribution is valued more than efficiency among the public.

Question 21

What is one key purpose of taxation?
A) To promote political campaigns
B) To fund public services and infrastructure
C) To reduce government debt
D) To subsidize corporate profits

Answer 21

B) To fund public services and infrastructure

Question 22

According to Adam Smith, a good tax should be:
A) Complicated to ensure fairness
B) Clear and certain in its terms
C) Irregular in collection
D) High enough to discourage wealth

Answer 22

B) Clear and certain in its terms

Question 23

Which principle emphasizes the need for taxes to minimize economic distortions?
A) Equity
B) Efficiency
C) Simplicity
D) Transparency

Answer 23

B) Efficiency

Question 24

What was the purpose of the informational videos on income tax?
A) To argue for specific tax levels
B) To explain the benefits of high taxation
C) To clarify the purpose and effect of taxes
D) To discourage the public from paying taxes

Answer 24

C) To clarify the purpose and effect of taxes

Question 25

Which video type increased support for a progressive income tax system?
A) Efficiency Video
B) Redistribution Video
C) Estate Tax Video
D) None of the above

Answer 25

B) Redistribution Video

Question 26

What triggered protests against the carbon tax in France?
A) Lack of public awareness
B) The burden of the tax on lower-income households
C) Environmental benefits
D) Support from local businesses

Answer 26

B) The burden of the tax on lower-income households

Question 27

What was the initial carbon tax rate set by the French government in 2014?
A) €10 per tonne
B) €20 per tonne
C) €7 per tonne
D) €50 per tonne

Answer 27

C) €7 per tonne

Question 28

What misconception contributed to public opposition to the carbon tax?
A) It would primarily benefit wealthy households
B) It would have no impact on pollution
C) It would significantly burden lower-income households
D) It would decrease government revenues

Answer 28

C) It would significantly burden lower-income households

Question 29

According to the research, what percentage of households believed they would benefit from the proposed carbon tax reform?
A) 70%
B) 50%
C) 14%
D) 30%

Answer 29

C) 14%

Question 30

What is a key finding about the beliefs of opponents of the carbon tax?
A) They are generally well-informed about tax impacts.
B) They hold biased beliefs about the tax’s effect on their finances.
C) They unanimously support the carbon tax.
D) Their beliefs are easily changed by new information.

Answer 30

B) They hold biased beliefs about the tax’s effect on their finances.

Question 31

Why is it challenging to change public perception about carbon taxes?
A) People are unaware of the economic benefits.
B) Individuals prefer information that supports their existing beliefs.
C) There is overwhelming support for carbon taxes.
D) The media coverage is too positive.

Answer 31

B) Individuals prefer information that supports their existing beliefs.

Question 32

Which statement reflects a common bias against the carbon tax among the public?
A) It will primarily reduce emissions effectively.
B) It is a fair tax that benefits everyone.
C) It disproportionately affects lower-income households.
D) It encourages greater economic activity.

Answer 32

C) It disproportionately affects lower-income households.

Question 33

What was a key finding regarding opponents of the carbon tax reform?
A) They universally supported the tax.
B) They held biased beliefs about the tax’s impact on their households.
C) They believed the tax would significantly reduce emissions.
D) They were well-informed about the tax system.

Answer 33

B) They held biased beliefs about the tax’s impact on their households.

Question 34

Which of the following was a result of the informational videos about the carbon tax?
A) Increased support for all tax types
B) Enhanced understanding of the tax system
C) Increased perceived behavioral responses to taxation
D) Decreased concern about inequality

Answer 34

C) Increased perceived behavioral responses to taxation

Question 35

What was the original purpose of the plastic bag levy introduced in Ireland?
A) To increase government revenue
B) To reduce the use of disposable bags
C) To subsidize reusable bags
D) To encourage online shopping

Answer 35

B) To reduce the use of disposable bags

Question 36

What percentage of French households supported the proposed carbon tax reform?
A) 50%
B) 14%
C) 70%
D) 10%

Answer 36

D) 10%

Question 37

Why did retailers in Ireland run a public awareness campaign regarding the plastic bag levy?
A) To encourage more disposable bag purchases
B) To avoid being seen as profiting from the levy
C) To promote reusable bags
D) To increase government transparency

Answer 37

B) To avoid being seen as profiting from the levy

Question 38

What concept explains why disposable bag taxes are more effective than bonuses for reusable bags?
A) Social responsibility
B) Loss aversion
C) Tax salience
D) Behavioral economics

Answer 38

B) Loss aversion

Question 39

What was the outcome of the 5-cent tax on disposable shopping bags in Maryland?
A) Increased usage of disposable bags
B) No significant change in behavior
C) A decrease in the proportion of customers using disposable bags by 42 percentage points
D) A rise in overall bag sales

Answer 39

C) A decrease in the proportion of customers using disposable bags by 42 percentage points

Question 40

What unintended consequence occurred in Chicago regarding the ban on thin plastic bags?
A) Retailers completely eliminated plastic bags
B) Retailers offered thicker plastic bags for free
C) The ban was widely accepted by consumers
D) Sales of disposable bags significantly decreased

Answer 40

B) Retailers offered thicker plastic bags for free

Question 41

What combination of policies has shown substantial reductions in disposable bag use?
A) Complete ban on all bags
B) Hybrid bans with fees for thicker bags and a ban on thin plastic bags
C) Subsidies for reusable bags only
D) Free distribution of reusable bags

Answer 41

B) Hybrid bans with fees for thicker bags and a ban on thin plastic bags

Question 42

What challenge does Killian Treacy highlight regarding environmental initiatives like the Killarney Coffee Cup Project?
A) Lack of interest from the public
B) Dependence on public goodwill without supportive policies
C) High costs of implementing new policies
D) Insufficient local participation

Answer 42

B) Dependence on public goodwill without supportive policies

Question 43

What is the primary purpose of taxation?
A) To promote economic equality
B) To fund government operations and public services
C) To increase corporate profitability
D) To encourage private sector investment

Answer 43

B) To fund government operations and public services

Question 44

Which of the following is an example of a Pigouvian tax?
A) Income tax
B) Pollution tax
C) Sales tax
D) Property tax

Answer 44

B) Pollution tax

Question 45

Which tax principle emphasizes that taxes should be easy for people to pay?
A) Equity
B) Certainty
C) Convenience
D) Efficiency

Answer 45

C) Convenience

Question 46

A progressive tax system is one in which:
A) Everyone pays the same rate regardless of income
B) Higher income earners pay a higher percentage of their income
C) Lower income earners pay a higher percentage of their income
D) Corporations are taxed more than individuals

Answer 46

B) Higher income earners pay a higher percentage of their income

Question 47

What is the Laffer Curve used to demonstrate?
A) The relationship between government spending and GDP
B) How tax rates affect tax revenue
C) The balance between efficiency and equity in taxation
D) The impact of tax evasion on the economy

Answer 47

B) How tax rates affect tax revenue

Question 48

Which of the following is an example of an indirect tax?
A) Corporate tax
B) Income tax
C) VAT (Value-Added Tax)
D) Inheritance tax

Answer 48

C) VAT (Value-Added Tax)

Question 49

What is the difference between tax avoidance and tax evasion?
A) Tax avoidance is illegal, while tax evasion is legal
B) Tax avoidance is legal, while tax evasion is illegal
C) Both tax avoidance and tax evasion are legal
D) Both tax avoidance and tax evasion are illegal

Answer 49

B) Tax avoidance is legal, while tax evasion is illegal

Question 50

What is ‘deadweight loss’ in taxation?
A) The inefficiency created by a tax that reduces the overall welfare
B) The revenue lost due to tax evasion
C) The amount of unpaid taxes owed by corporations
D) The administrative cost of collecting taxes

Answer 50

A) The inefficiency created by a tax that reduces the overall welfare

Question 51

Which tax is considered the most harmful to GDP growth according to the OECD?
A) Personal income tax
B) Corporation tax
C) Property tax
D) Consumption tax

Answer 51

B) Corporation tax

Question 52

What is meant by ‘tax competition’ between countries?
A) Countries lowering tax rates to attract businesses and investment
B) Countries collaborating to standardize tax rates
C) Countries competing to raise the highest amount of tax revenue
D) Countries agreeing to avoid double taxation

Answer 52

A) Countries lowering tax rates to attract businesses and investment

Question 53

A regressive tax system is characterized by:
A) Lower-income individuals paying a higher percentage of their income
B) Everyone paying the same tax rate
C) High-income earners paying a higher percentage
D) A reduction in taxes as income increases

Answer 53

A) Lower-income individuals paying a higher percentage of their income

Question 54

What is the goal of international tax treaties related to double taxation?
A) To impose higher taxes on multinational companies
B) To ensure income is taxed only once across jurisdictions
C) To prevent tax competition between countries
D) To increase tax revenue from foreign investments

Answer 54

B) To ensure income is taxed only once across jurisdictions

Question 55

Which of the following refers to strategies used by corporations to shift profits to low-tax jurisdictions?
A) Transfer pricing
B) Base Erosion and Profit Shifting (BEPS)
C) Tax evasion
D) VAT fraud

Answer 55

B) Base Erosion and Profit Shifting (BEPS)

Question 56

What is the primary aim of redistributive taxation?
A) To reduce government spending
B) To increase revenue for infrastructure projects
C) To reduce income inequality
D) To encourage foreign direct investment

Answer 56

C) To reduce income inequality

Question 57

What is the relationship between the Laffer Curve and tax revenue?

A) Higher tax rates always result in higher tax revenue
B) Lower tax rates always result in higher tax revenue
C) The Laffer Curve suggests that increasing tax rates beyond a certain point will decrease tax revenue
D) The Laffer Curve suggests that higher tax rates have no impact on revenue

Answer 57

C) The Laffer Curve suggests that increasing tax rates beyond a certain point will decrease tax revenue