| Consider the following statements: |
| 1. Sin Tax is a state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. |
| 2. The first budget of the National Rural Health Mission actually came from taxes on tobacco. |
| 3. Levying a sin tax can lead to reduced consumption of harmful substances such a tobacco and alcohol. Which of the above statements are correct? |
A) 1, 2
B) 1, 3
C) 2, 3
D) All of the above
Correct Answer: D
Solution :
[d] "Sin Taxes" are so called because they are levied on those commodities, such as tobacco and alcohol, which are the objects of widespread disapproval. "Such taxes," Paul Samuelson says, "are often tolerated because most people-including many cigarette smokers and moderate drinkers-feel that there is something vaguely immoral about tobacco and alcohol. They think these "sin taxes" stun two birds with one stone: the state gets revenue, and vice is made more expensive."
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