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If a country has a large working-age population, what potential effect may occur on the tax base?

Answer and explanation

Correct answer: The potential number of taxpayers may increase

A large working-age population can enlarge the potential tax base because more people are in the ages when they may work, earn income, and contribute taxes. This can support public revenue and may create a demographic opportunity if the country has enough jobs, useful skills, fair wages, and an effective system for collecting taxes.

Therefore, option A is the appropriate conclusion. The word “potential” is important: being of working age does not automatically mean that every person is employed or pays tax. Informal work, unemployment, low incomes, exemptions, and weak administration may limit the actual tax base. The other choices are incorrect because children are not the only taxpayers, the tax base does not automatically disappear, and an elderly population does not automatically become zero.

Related tags

Tax BaseWorking Age PopulationEconomic ParticipationAge StructurePopulation CompositionGeographyClass 12 McqRdgdfgdfg

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