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CAIE IGCSE Economics 4.2.3 Taxation

Use tax schedules and policy contexts to identify the tax type, calculate receipts and explain effects on consumption, imports, income distribution, incentives and total demand.

Syllabus
2027–2029
Course
Economics 0455

Exam points

  • Classify a tax as direct or indirect and as progressive, proportional or regressive.
  • Calculate tax revenue by adding the relevant receipts or applying a tax rate to the base.
  • Analyse how taxation affects consumption, imports, incentives, inequality or aggregate demand.

4.2.3—Taxation question 1

[Maximum number: 2]

Digital money, such as cryptocurrencies, is increasingly being used. Digital money transactions take place on electronic devices such as computers and smartphones. However, there can be market failure due to external costs arising from high energy usage of non-renewable sources. One way of reducing external costs is to tax the product.

Identify two types of tax.

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