IB Economics HL 3.4.10 Hl Taxation Calculations Questions

Practise 3.4.10 (HL) Taxation calculations in IB Economics HL by reviewing the concepts and applying them to marked questions.

Exam points

Calculate indirect tax paid from a tax rate and expenditure level
Calculate total tax and average tax rates from data

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Study 3.4.10 (HL)—Taxation calculations conceptsOpen the corresponding Concept lesson for explanations, examples and exam connections.

[Maximum number: 2]

The data in Table 2 refer to Kanyaland, a small, open, developing economy in 2019. All data are in billions of Kanyaland dollars (K$).

Table 2

Using Table 4, calculate the average tax rate for Sammy.

Tax paid by Sammy:
(0.22 x 20000) + (0.26 x 10000) + (0.30 x 8000) + (0.34 x 8000) = 12120.

Average tax rate = 12120 / 46000 x 100 = 26.35%.

OR

Average tax rate = 12120 / 46000 = 0.26.

Valid working, ie three of the four terms in parentheses correct, is sufficient for [1].

\begin{aligned}\text{Tax paid}&=(0.22\times20000)+(0.26\times10000)+(0.30\times8000)+(0.34\times8000)=12120\\\mathrm{ATR}&=\frac{12120}{46000}\times100=26.35\%\\\mathrm{ATR}&=\frac{12120}{46000}=0.26\end{aligned}

An answer of 26.35 or 0.26 without any valid working is sufficient for [1].

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IB Economics HL 3.4.10 Hl Taxation Calculations Questions question 1