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(Solved): Country M levies a 10 percent excise tax on the retail price of any automobile purchased in the coun ...



Country M levies a 10 percent excise tax on the retail price of any automobile purchased in the country. This year, the aggregate purchase price subject to tax was $8.5 million, so current year revenue was $850,000. Country M plans to increase the tax rate next year to 11 percent. Required: Compute next year’s excise tax revenue assuming next year’s tax base equals the current year base. Compute next year’s excise tax revenue assuming next year’s tax base increases to $9.8 million. Compute next year’s excise tax revenue assuming next year’s tax base decreases to $7.5 million.



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