Question

In Country X a returning tourist may import goods with a total value of $500 or less tax free, but must pay an 8 percent tax on the portion of the total value in excess of $500. What tax must be paid by a returning tourist who imports goods with a total value of $730 ?

Answer 1

Answer:

$18.4

Explanation:

Data provided in the question:

Maximum value on which there is no tax = $500

Tax paid on the portion of the total value in excess of $500 = 8% = 0.08

Total value of the goods imported by the returning tourist = $730

Now,

The excess amount of portion on which the tax will be charged

= Total value of the goods imported - Maximum value on which there is no tax

= $730 - $500

= $230

Therefore,

@8% tax rate

Total tax that must be paid on excess portion i.e $230

= $230 × 8%

= $230 × 0.08

= $18.4