In: Economics
Assume you are a member of the New York City Council prior to the COVID 19 crisis. The Council is considering placing an excise tax on the following goods
After hearing that you studied Economics at Ramapo College, the City Council members ask you to select the products that would result in the most efficient tax policy. You recommend...
Group of answer choices
A.1, 2 and 3
B.1, 2, 3 and 4
C.1 only
D.1 and 3
Ans. C. 1 and 3 only.
Gasoline : Most efficient tax policy would result if there is excise tax on gasoline as gasoline is not an essential commodity, people can survive with low amount of gasoline so excise duty should be imposed on it and it will result in efficient tax policy.
Tickets to an extremely popular Broadway show : It requires excise duty because it is not preferable by everyone and only those people will attend it who like it as it is not necessity so excise tax can be imposed on it.
Other options are
Hot dogs : It is not a kind of material on which excise duty shall be imposed as it is an eatable and people will not like to pay tax on it and it is not required as well.
Salt : It is an essential commodity so nobody will like to pay excise duty on it .