Public finance and taxation assignment

Choose the best answer from the given alternatives and write the letter of your choice on the separate
answer sheet prepared by you.
1. Which one of the following is true with respect to Similarities between Public Finance and
Private Finance
A. both the private and public finance have the same objective, viz, the satisfaction
of human wants
B. Both individual and Government have incomes and expenditures and trying to
balance each other
C. Both private and public finance aims at maximum satisfaction.
D. As and when the current income becomes insufficient to meet the current
expenditure, the individuals and Governments rely upon borrowings.
E. All are correct

2. Which categories of public finance deals with analyses and the use of public finance to
bring the economic stability, growth and distributive justice in the country
A. Public Revenue
B. Economic stabilization
C. Public debt
D. Public spending
E. Financial Administration and control

3. Which one of the following is false about the function of a budget

A. It brings Proper allocation of resources
B. It brings inequitable distribution of income and wealth
C. It relates all major decisions to the state of the national economy;
D. it ensures efficiency and effectiveness in the implementation of government
programs;
E. It facilitates legislative control over the various phases of the budgetary process.
4. The sharing of revenue between the central government and the National/ Regional
governments shall take in to consideration the following Principles:
A. Ownership of source of revenue;
B. The national or regional character of the sources of revenue;
C. Convenience of levying and collection of the tax or duty;
D. Population, distribution of wealth and standard of development of each region;
E. Other factors that are basis for integrated and balanced economy
F. All of the forgoing
5. Which one of the following is not Exempted from employment income tax
A. Income gained from employment received by casual employees who are not
regularly employed for more than one month
B. Income from employment, received for services rendered in the exercise of their
duties by diplomatic and consular representatives.
C. A monthly sum paid to an employee for bearing a particular office responsibility
D. Payments made to a person as compensation for injuries suffered by other person
E. All of the above
 6. AtoKibebewKumlacew received a monthly Salary of Birr 11,230 and over time income of
Br. 340 subject to income tax. Then the amount of tax liability and pension contribution
by the employee is Br. _______and _______ respectively
A. Br. 2,430.5 and Br. 786.1 D. Br. 2,549.5 and Br. 786.1
B. Br. 2,549.5 and Br. 809.9 E. None of the above
C. Br. 2,430.5 and Br. 809.9
7. Which canon or principle of Adam Smith states “the subjects of every state ought to
contribute toward the support of the Government, as nearly as possible, in proportion to
their abilities
A. Canons of Equality D. Canons of convenience
B. Canons of Economy E. Canons of Simplicity
C. Canons of certainty
8. Which of the following is not true about ad-valorem duty
A. Ad-valorem duty is levied on the certain percentage on the value of commodity to be
taxed
B. Ad-valorem duty is very difficult to administer than specific duty
C. .Ad-valorem duty brings higher revenue during the period of rising prices.
D. Ad-valorem duty is levied as to the weight, length, bulky, etc. of the commodity to be
taxed
E. None of the above
9. Which tax rates are the rates imposed on each additional Birr earned within each tax
bracket.
A. Marginal Rate C. Average Rate
B. Statutory Rate D. Effective Rate
Short answer and Discussion questions
1. Discuss briefly the historical development of taxation in Ethiopia.
2. Write and discuss canons of taxation which cannot be advocated by Adam Smith?
3. Define the Tax on Income from Royalties?
4. Write the similarities and dissimilarities between Public Finance and Private Finance?
5. Write and discuss in detail the budget process in Ethiopia? What is taxation?
6. Explain the advantages and disadvantages of proportional taxation.
7. Explain the two types of government revenue in detail.
8. What type of income is included in Schedule “A” B, C, D and E under the new
proclamation?
9. What income is exempted from employment income tax?
10. What is VAT?
11. What is taxable activity?
12. Who pays Value Added Tax?
13. What are the main differences between VAT and Sales Tax?
14. What is the consequence of failure to furnish tax return on a timely basis from legal point
of view?
15. Discus the merits and demerits of the new excise tax implemented in the 2012 Ethiopian
calendar year?
16. Write the characteristics of a good tax system?
17. Critically explain the concept of 'ability to pay' theory of taxation?