How Taxes Influence Behavior Part 1

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Assessment Solutions Theme 5: Impact of Taxes Lesson 1: How Taxes Influence Behavior Part 1 Match the clues to the correct terms found in the answer key. Write the letter of each term in the space provided. Answer Key: A. user tax B. excise tax C. sin tax D. gasoline excise tax E. luxury tax A A tax that is paid to the government by consumers when they purchase particular goods. C The point of this is to discourage the purchase of goods that do not promote consumers’ health. E This is placed on goods that are expensive and considered nonessential. B The purpose of this is to make consumers pay the price of manufacturing and distribution of certain products. D This has generated millions for road repair for more than sixty years. Part 2 In the space provided, identify the tax that could cause the behaviors described below. 1. You take the bus to work. gasoline excise tax 2. You stop smoking. sin tax 3. You drink only nonalcoholic beverages. sin tax 4. You put off buying a new sports car until next year. luxury tax 5. You join a car pool. gasoline excise tax Understanding Taxes 1 Part 3 Indicate whether each of the following statements below is True or False. Write your answer in the space provided. 1. The sin tax is older than the United States itself. True 2. The luxury tax can discourage the use of alcohol and cigarettes. False 3. Revenue from the gasoline excise tax is used to build oil refineries. False 4. The telephone and chewing gum were once taxed as luxury items. True 5. Luxury taxes are placed on expensive, nonessential goods. True Understanding Taxes 2 .

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