Maura Owns a Company That Operates a Restaurant

question 41

Multiple Choice

Maura owns a company that operates a restaurant.Much of the business' profits are earned on the sale of alcohol.Those profits were reduced, however, after the province imposed a hefty tax on restaurants that sold alcoholic beverages.As the government anticipated, restaurants like the one owned by Maura responded by raising the price of each drink by the amount of the tax.The business nevertheless suffered because the customers, who realized that they were effectively paying for the tax, drank less or avoided the restaurant altogether.Which of the following facts is most likely to be TRUE?

• A)The tax is invalid because it is indirect.
• B)The tax is invalid because provinces have the power to tax individuals, but not corporations.
• C)The tax is valid, but the province will have to share the money with the federal government.
• D)The tax is valid because it is imposed directly on the company.
• E)The tax is valid, but only if it was authorized by the federal government.

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