munire, Ahmed and maryam are three individuals who come from the same background and are as fast friends. As normal individuals in an economy, they earn money and spend the same on leading good lives .They are tax payers of a country with annual income of 26000, 39000 and 44000 respectively. A standard assumption is that all the three individuals spend approximately 12000 on purchase of essentials. These essentials are subject to sales tax. Based on the above case you are required to:

I) Calculate the tax being paid by each individual under a, b, c and d scenarios.

II) Comment in detail (using calculations from I) about features and effects of each of the given tax structures on individuals and on the economy.

III) Comment giving justification as to which tax structure (a, b or c) would be the most beneficial to a country.

TAX STRUCTURE

a) The country follows a flat tax rate of 15%.

b) The country follows a tax rate as follows:

Upto 7499Nil

7500 129995 %

13000- 2399910%

24000 3999920%

Above 4000030%

c) The country follows a dual tax rate system as follows

Up to 2400010%

24000 and above20%

d) The Sales tax rate in the country is 9%