A toll on a congested road is in essence a. an interstate highway subsidy. b. a corrective tax. c. a hidden tax. d. a gasoline tax.

b. a corrective tax.

Explanation:

Taxation can be defined as the involuntary or compulsory fees levied on individuals or business entities by the government to generate revenues used for funding public institutions and activities.

There are three (3) types of taxation used by the government, these are;

1. Progressive taxation: it involves charging individuals having higher incomes a higher percentage of their total income.

For instance, Citizen X pays 30% on $70,000 and Citizen B pays 10% on $45.000.

2. Proportional taxation: it involves charging both lower and higher income earners equally in proportion to their income.

For instance, Citizen A pays 20% on $50,000 and Citizen B pays 20% on $36,000.

3. Regressive taxation: it involves charging individuals with low incomes a higher percentage of their total income and vice-versa.

For instance, Citizen A pays 15% on $50,000 and Citizen B pays 20% on $36,000.

A corrective tax can be defined as a type of taxation imposed by the government on its citizens to correct negative externalities such as facilities, services or amenities that have socially harmful effects or capable of causing damages to the people.

Hence, a toll on a congested road is in essence a corrective tax.

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