Tax - Marvel EDU

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Practice Reading: Multiple Choice, Single Answer ID: #32974 Tax

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Read the text and answer the multiple-choice question by selecting the correct response. Only one response is correct.

Excise taxes are governmental levies on specific goods produced and consumed inside a country. They differ from tariffs, which usually apply only to foreign-made goods, and from sales taxes, which typically apply to all commodities other than those specifically exempted. In their modern farm, excise taxes were first developed by Holland in the 17th century, and established by law in England in 1643. Introduced into the Dutch colonies in America, the system spread to other colonies. Such taxes were first used by the federal government in 1791 and aroused great opposition. They were repealed (1802) in Thomas Jefferson's administration. During the War of 1812 comprehensive excise taxes were levied again but were repealed in 1817.

According to this text, how do excise taxes usually differ from tariffs?

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Excise taxes are levied on all products, while tariffs apply to government-made goods. Excise taxes are levied on specifically identified commodities, while tariffs apply to all goods. Excise taxes are levied on goods produced and consumed in one country, while tariffs apply to imports. Excise taxes are levied on goods to which sales tax does not apply, while tariffs apply only to goods on which sales tax is imposed.

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Option 3: "Excise taxes are levied on goods produced and consumed in one country, while tariffs apply to imports."

Explanation: This option is correct as it accurately reflects the information in the text. Excise taxes are indeed levied on goods that are produced and consumed within a country, while tariffs are specifically applied to imported goods. This distinction is clearly outlined in the text, making this option the correct answer.

Option 1: "Excise taxes are levied on all products, while tariffs apply to government-made goods."

Explanation: This option is incorrect because it misrepresents the nature of excise taxes and tariffs. Excise taxes are not levied on all products; they are specific to certain goods produced and consumed within a country. Additionally, tariffs do not apply only to government-made goods; they are imposed on imported goods, regardless of their origin.

Option 2: "Excise taxes are levied on specifically identified commodities, while tariffs apply to all goods."

Explanation: This option is incorrect because it inaccurately describes tariffs. While it is true that excise taxes are levied on specific commodities, tariffs do not apply to all goods indiscriminately. Tariffs specifically target imported goods, not all goods.

Option 4: "Excise taxes are levied on goods to which sales tax does not apply, while tariffs apply only to goods on which sales tax is imposed."

Explanation: This option is incorrect because it presents a misleading relationship between excise taxes, sales taxes, and tariffs. Excise taxes are not limited to goods exempt from sales tax; they are specific to certain goods regardless of sales tax applicability. Furthermore, tariffs do not only apply to goods subject to sales tax; they are imposed on imports.

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