Which of the following statements about the ‘Why Pay Tax?’ and ‘Sources and Uses of Tax’ sections of the lecture material are TRUE:

1. A common ‘myth’ about taxation is that most of it goes to paying the salaries of politicians. This myth is false because the majority of government expenditure is on the provision of important services to the community and social security.
2. There is some debate about the ‘right level’ of government involvement in the economy. Some argue that the government can solve problems in the economy better than the private sector and so advocate a larger role for government. Others advocate that excessive government involvement tends to create inefficiencies over the long-term.