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Kenyatta University Examinations 2009/2010 First Semester For The Degree Of Bachelor Of Economics Question Paper

Kenyatta University Examinations 2009/2010 First Semester For The Degree Of Bachelor Of Economics

Course:Bachelor Of Economics And Statistics

Institution: Kenyatta University question papers

Exam Year:2010

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
ECONOMICS

EAE 201: TAXATION ECONOMICS AND POLICY

DATE: TUESDAY 9TH FEBRUARY 2010 TIME: 11.00A.M-1.00P.M

INSTRUCTIONS
Answer Questions ONE and any other TWO questions.

Question One(Compulsory)
a) Define the following terms. (14 marks)
i) Excess tax burden
ii)Tax base
iii)Horizontal equity
iv)Tax incidence
v) In rem tax
vi) Ad valorem tax
vii)Tax shifting
b) Two individuals have a wage income of Ksh.100. Individual 1 consumes in the first period
while individual 2 save at 10% interest rate and consumes in the second period. The
government needs to impose an income tax of 10% or an equivalent consumption tax. In
which case is horizontal equity realized? Show your working? (8 marks)
c) Explain four limitations of using expenditures only as a base for taxation and how each
of the limitations can be minimized. (8 marks)

Question Two
a) Explain five desirable features of a good tax system. (10 marks)
b) Under what two conditions is benefit taxation feasible? (2 marks)
c) State the limitations of benefit taxation in Less Developed Countries. (8 marks)

Question Three
a) Explain five major issues that motivate and shape tax reforms in developing countries?
(10 marks)
b) Describe ten important considerations in the evaluation off tax proposals. (10 marks)

Question Four
a) Highlight five reasons why the government should actively participate in the economy.
(10 marks)
b) Describe four methods of measuring the size of government. (4 marks)
c) Explain three reasons why many governments use taxation as a major source of revenue even though it has negative effects on economic activities. (6 marks)

Kenyatta University Examinations 2009/2010 First Semester For The Degree Of Bachelor Of Economics Question Paper

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