Is payment of interest tax included/excluded in National Income?
Is payment of interest tax included/excluded in National Income?
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No,
The payment of interest tax will not be included in the national income as it is a compulsory transfer payment to the government.
Explanation:
Any tax to the government is a transfer payment as the government does not guarantee any productive services and goods in return.
Thus any economic transaction where no factor services against it, is a transfer payment.
It does not add to the flow of goods in the economy.
Thus, It is not included in the National Income.
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