The following is an extract from the 2015 Budget on tax proposals for the upcoming fiscal year:

Nominal gross tax revenue for 2013/14 amounted to R900 billion, a 10.6 per cent or R86.2 billion increase from the prior year.

The 2014 Budget projected 10.5 per cent growth in tax revenues for 2014/15. This has been revised down to 8.8 per cent, reflecting weaker-than-expected economic growth.

The 2015 tax proposals reflect government's commitment to stabilise the fiscus, while ensuring that the tax system remains fair, efficient and progressive.

The main proposals are to raise personal income tax rates for all but the lowest tax bracket by one percentage point, and to increase the fuel levies by a total of 80.5 c/litre.

Using the appropriate theories, including graphs or equations where necessary, critically assess government's rationale behind the following tax decisions and indicate whether you would ultimately agree or disagree with such decisions:

i. The increase of income tax and the fuel levy, as opposed to other tax instruments such as VAT or corporate tax.

ii. The continuous increase in the Sin (tobacco and alcohol) taxes. [25 marks]