The government of the U.S. Virgin Islands seeks your help to evaluate two tax sc

Question

The government of the U.S. Virgin Islands seeks your help to evaluate two tax schemes In scheme A, food is not taxed, luxury goods are taxed at 10 percent, and all other goods are taxed at 5 percent In scheme B, there is a flat 3 percent tax on all goods and services. Which tax scheme would be more efficient if both generated the same amount of tax revenue? If both tax schemes generate the same amount of tax revenue, scheme is more efficient because O A. A luxury goods have an elastic demand and food has an inelastic demand O B. B it taxes all goods and services equally O C. A, it taxes luxury goods by a higher percentage and does not tax food O D. B; it taxes luxury goods by a smaller percentage and taxes food by a higher percentage O E. B luxury goods have an inelastic demand and food has an elastic demand

Explanation / Answer

Answer
Option C
because the Scheme A taxes luxury goods and not tax the necessity which is food and that is good for the stakeholders of the society

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