Taxation is a convenient way of funding government spending and can be used to a

Question

Taxation is a convenient way of funding government spending and can be used to achieve goals beyond simply raising revenues. Taxes placed on people and businesses affect the decisions both make by changing relative costs. These distortions can change consumption and production decisions and oftentimes lead to inefficiency. One way the government tries to minimize the effect of taxes on behavior is by adding small taxes and fees to expensive transactions, in hope that the additional charge will seem trivial enough to individual consumers that they will not change the way they spend. At the same time, these fees will raise the government's revenue goal, because there are so many paid across a large number of transactions. This balance may be breaking in the airline industry, though. There, the weight of so many small taxes are collectively starting to feel like an undue burden on consumers When you read the article below, take note of the arguments for and against increasing the taxes on air travel and why some believe it is a larger issue than do others. Read the article in the scroll box below, and then answer the questions that follow

Explanation / Answer

There isno incentive for those spending the tax revenyes to keep their cost low

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