Answer to Question #196547 in Economics for SBONGISENI

Question

In 2019, Joy was earning R195 800 per annum (and being taxed 18% of taxable income) as a trainee economist. In 2020, she was promoted to a junior economist position and her salary was increased to R300 850 per annum (and being taxed R35 253 plus 26% of taxable income). In both years, Joy purchased goods and services to the value of R161 500 per annum (excluding VAT) and paid VAT at 15%, that is, R28 500 per annum.

Given that Joy’s spending remained the same during 2019 and 2020, which one of the following statements is correct?

[1] The proportion of tax paid by Joy on consumption of goods and services in 2020 has decreased.

[2] Income tax paid by Joy from her earnings is proportional.

[3] Joy is paying a personal income tax, company tax and value-added tax.

[4] All taxes paid by Joy are direct taxes.

Answer 1

The proportion of tax paid by Joy on consumption of goods and services in 2020 has decreased, because his income tax sum paid increased, and the consumption tax paid remained the same.

So, the correct answer is [1].