Excise tax on restaurant meals


Government L levies a 4% excise tax on restaurant meals. It is considering reducing the rate to 2% on meals served in restaurants that ban cigarette and cigar smoking and to increase the rate to 5% in restaurants that allow smoking. Which of the following statements is true?

a. The rate change would improve the neutrality of the excise tax.

b. The rate change would improve the convenience of the tax.

c. The rate change is intended to affect social behavior.

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Business Management: Excise tax on restaurant meals
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