Tax directly levied on business profits

Steps:

• Identify the target: The tax increase targets firms (businesses) to boost government revenue.
• Recall tax types: Direct taxes hit firms' earnings; indirect taxes pass costs to consumers.
• Evaluate options: Match each to whether it's imposed on firms' operations or profits.
• Select match: Profits tax aligns with taxing firms directly.

Why B is correct:

• Profits tax (corporate income tax) is a direct levy on firms' net earnings, increasing government revenue from business profits as per tax law definitions.

Why the others are wrong:

• A. Inheritance tax applies to estates and individuals upon death, not firms.
• C. Sales tax is an indirect tax on consumer purchases, collected by firms but not paid by them.
• D. Value added tax is an indirect consumption tax on goods/services, ultimately borne by end consumers.

Final answer: B