Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

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6. The cost of service principle implies that every people should 
contribute in taxes the actual cost of public services by which 
he is benefited. 
7. Benefit principle suggests that the burden of taxes should be 
distributed among the tax-payers in relation to the benefits 
enjoyed by them from government services or social goods 
8. Ability to Pay principle suggests that every person should be 
taxed according to his ability-to-pay. 
9. Equal total or absolute sacrifice implies that the total loss of 
utility on account of tax should be equal for all tax-payers. 
10. Equal proportional sacrifice suggests that the sacrifice or 
loss of income utility in tax payment should be proportional 
to the total amount of each tax-payer. 
11. Equal marginal sacrifice means that the marginal utility of 
income sacrificed by all the tax-payers should be the same. 
12. Incidence refers to the ultimate money burden of the tax. 
13. Impact refers to the immediate result of or original imposition 
of the tax. 
14. Shifting is the process of passing on, or transferring part, or 
the entire tax burden from the subject of the tax to another 
individual. 
15. According to Dalton, the imposition of a tax leads to two 
types of burden on the people, i.e. money and real burden. 
16. Money burden refers to the amount of tax contribution which 
has to be made by the tax payer to the government. 
17. Real burden relates to the sacrifice which the imposition of a 
tax entails on the tax payers. 
18. Formal incidence refers to the proportion of tax-
payer‘s 
income that has been paid over to the government in 
financing public expenditure. 
19. Effective incidence refers to the overall economic 
consequences of a tax. 
20. The concept of incidence of a tax is of great significance as it 
explains the ultimate burden of taxation.
21. To know the tax shifting and tax sharing for tax authorities it 
is important to discuss on factors influencing incidence of 
taxation. Change in price reflects tax shifting or tax sharing. 
22. The main factors influencing the price changes or tax 
shifting are elasticity of demand and supply, supply under 
different cost conditions and market structure 
23. The excess burden of taxation is the efficiency cost, or 
deadweight loss, associated with taxation. It is the economic 

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loss that society suffers as a result of a tax, over and above 
the revenue it collects. 
24. A tax on wage income also gives rise to deadweight loss or 
excess burden of tax. The excess burden arises because a 
tax on wage income distorts the decisions of the workers.