Question
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
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 $6.1 million, so current year revenue was $610,000. Country M plans to increase the tax rate next year to 11 percent.
Compute next years excise tax revenue assuming next years tax base equals the current year base.
Compute next years excise tax revenue assuming next years tax base increases to $7.4 million.
Compute next years excise tax revenue assuming next years tax base decreases to $5.1 million.
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