1.

Jurisdiction R and Jurisdiction S both impose a personal income tax on their

residents. Under Jurisdiction R’s system, employers are required to withhold
income tax from their employees’ paychecks and remit the tax to the
government. Jurisdiction S’s system has no such withholding requirement.
Instead, residents must compute their income tax and pay the tax directly on a
monthly basis. Which tax system is more convenient for the government and
for the taxpayer?
2.Country M levies a 10 percent excise tax on the retail price of any automobile
purchased in the country. This year, the aggregate purchase price subject to tax
was P8 million, so current year revenue was P800,000. Country M plans to
increase the tax rate next year to 11 percent. Compute next year’s excise tax
revenue assuming:
a. Next year’s tax base equals the current year base.
Tax base anticipated P 8,000,000
Multiply by: next tax rate 11%
Next Year Tax Revenue P 880,000

b. Next year’s tax base increases to P9.3 million.

Tax base anticipated P 9,300,000
Multiply by: next tax rate 11%
Next Year Tax Revenue P 1,023,000

c. Next year’s tax base decreases to P7 million.

3.Mrs. K, a single taxpayer, earns a P42,000 annual salary and pays 15 percent
in state and federal income tax. If tax rates increase so that Mrs. K’s annual tax
rate is 20 percent, how much additional income must she earn to maintain her
after-tax disposable income?