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# Finance Minister: Last year was disastrous for our manufacturing

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Director
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Finance Minister: Last year was disastrous for our manufacturing  [#permalink]

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19 Apr 2017, 04:43
1
15
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Difficulty:

75% (hard)

Question Stats:

58% (02:15) correct 42% (02:18) wrong based on 571 sessions

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Finance Minister: Last year was disastrous for our manufacturing sector, which has traditionally contributed about 75% of our national budget. It is therefore encouraging that there is evidence that the IT sector is growing stronger. Taxes from the IT sector accounted for 15% of our national budget, up from 8% last year.

On the basis of the statements above, what best supports the above conclusion?
A The increase in taxes from the IT sector could have merely been the result of new laws imposed on the IT sector.
B The profits of the IT sector remained at a steady level despite the fact that it paid more taxes to the national government.
C The rise in the percentage of taxes that the IT sector contributed to the national government was insignificant in actual dollar terms.
D It is difficult to determine whether the jump from 8-15% tax contribution by the IT sector will be ongoing.
E The information given above does not fairly compare the contribution of taxes paid by different industries to the national government.

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Re: Finance Minister: Last year was disastrous for our manufacturing  [#permalink]

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02 Oct 2017, 06:55
1
Please explain why B is correct
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Re: Finance Minister: Last year was disastrous for our manufacturing  [#permalink]

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02 Oct 2017, 07:23
2
devikeerthansr wrote:
Please explain why B is correct

Minister claims (the conclusion) that paying higher tax is a sign of growth but we need to also ensure that they have the same or higher profit levels to actually claim that they have growth.

Taxes eat into your profits. Option B states that though the IT companies paid higher taxes, their their profit levels were steady.
If they paid higher taxes yet had positive profits then their revenues(or earnings) were higher. We can conclude that they were growing and earning more. despite the fact that they paid more taxes they still had enough (positive steady profits).
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Re: Finance Minister: Last year was disastrous for our manufacturing  [#permalink]

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03 Oct 2017, 02:02
Nightmare007 wrote:
Finance Minister: Last year was disastrous for our manufacturing sector, which has traditionally contributed about 75% of our national budget. It is therefore encouraging that there is evidence that the IT sector is growing stronger. Taxes from the IT sector accounted for 15% of our national budget, up from 8% last year.

On the basis of the statements above, what best supports the above conclusion?
A The increase in taxes from the IT sector could have merely been the result of new laws imposed on the IT sector.
B The profits of the IT sector remained at a steady level despite the fact that it paid more taxes to the national government.
C The rise in the percentage of taxes that the IT sector contributed to the national government was insignificant in actual dollar terms.
D It is difficult to determine whether the jump from 8-15% tax contribution by the IT sector will be ongoing.
E The information given above does not fairly compare the contribution of taxes paid by different industries to the national government.

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FIRST OF ALL, this is a strengthen question, not an assumption
Lets do some maths before solving this
lets's say
earlier TOTAL taxes(T.t.) = 100
TAXES FROM MANUFACTURING (M.T)=75 ((given 75 percent
TAXES FROM IT (IT)= 8 (( given 8 percent
Taxes from others= 23 (( 23 percent

last year M.T was disastrous let's assume 59 percent contribution
I.T = 18 percent contribution
others = 23 percent

now there can be two cases here.
CASE 1 REVENUE WAS SAME AS OLD YEAR AND THE TAXES FROM MANUFACTURING DECREASED AND I.T. INCREASED.
T.R.=100
T.M.= 59 \$(( DECREASED TAXES))
TAXES FROM IT=18\$
AND OTHERS =23\$
NOW ,we have to assume that the increased taxes are from increased revenue from IT sector, which is growth in It sector and not an undue burden from government of taxes on IT sector. Therefore, profits are either incresing or at steady levels. option b says that.

Case 2 REVENUE from taxes decreased = 55 (( HERE TAXES FROM IT ARE SAME AS PREVIOUS YEAR THAT IS 8\$
AND MANUFACTURING TAXES HAVE DECREASED))
TAXES FROM IT=8\$
TAXES FROM MANUFACTURING ((51 PERCENT ASSUMED))= 28\$
OTHERS (23%)= 19\$
now here 8\$ is 15 percent total revenue =55
this signifies that nothing in I,T, sector has changed
the revenues have decreased and that's why the 8 percent contribution in taxes by I.T sector amounts to 15 percents
this clearly means that the profits of I.T. level are at a steady level, because nothing has changed for I.T. sector
THEREFORE, b is a clear winner here

as far as other options are concerned
a) out of scope
d) no tie to the conclusion answer
e) again no tie to the conclusion
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Re: Finance Minister: Last year was disastrous for our manufacturing  [#permalink]

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03 Oct 2017, 05:17
Nightmare007 wrote:
Finance Minister: Last year was disastrous for our manufacturing sector, which has traditionally contributed about 75% of our national budget. It is therefore encouraging that there is evidence that the IT sector is growing stronger. Taxes from the IT sector accounted for 15% of our national budget, up from 8% last year.

On the basis of the statements above, what best supports the above conclusion?
A The increase in taxes from the IT sector could have merely been the result of new laws imposed on the IT sector.
B The profits of the IT sector remained at a steady level despite the fact that it paid more taxes to the national government.
C The rise in the percentage of taxes that the IT sector contributed to the national government was insignificant in actual dollar terms.
D It is difficult to determine whether the jump from 8-15% tax contribution by the IT sector will be ongoing.
E The information given above does not fairly compare the contribution of taxes paid by different industries to the national government.

Hit kudos if you like the question .

What is the source of this question?
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Re: Finance Minister: Last year was disastrous for our manufacturing  [#permalink]

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03 Oct 2017, 07:59
Experts pls help .

Can get , why option B is correct ?
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Re: Finance Minister: Last year was disastrous for our manufacturing  [#permalink]

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03 Oct 2017, 23:25
(B) The profits of the IT sector remained at a steady level despite the fact that it paid more taxes to the national government.

in the condition that "Taxes from the IT sector accounted for 15% of our national budget, up from 8% last year", if the profits of the IT sector remained at a steady level, we can conclude that "IT sector is growing stronger"
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Re: Finance Minister: Last year was disastrous for our manufacturing  [#permalink]

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04 Oct 2017, 05:58
bluetrain wrote:
(B) The profits of the IT sector remained at a steady level despite the fact that it paid more taxes to the national government.

in the condition that "Taxes from the IT sector accounted for 15% of our national budget, up from 8% last year", if the profits of the IT sector remained at a steady level, we can conclude that "IT sector is growing stronger"

Right. Taxes eat into your profits. Option B states that though the IT companies paid higher taxes, their their profit levels were steady.
If they paid higher taxes yet had positive profits then they were growing.
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Re: Finance Minister: Last year was disastrous for our manufacturing  [#permalink]

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05 Apr 2019, 07:56
Hi,
Argument is pretty straight forward. Tax contribution of IT industry has increased from 8% to 15% where as that of manufacturing has declined. Based on this observation, FM concludes that IT industry has grown stronger.
Question stem asks to strengthen FM's idea/conclusion.

Pre-think: Since the figures are given in percentage, any option that could show that the actual number is also greater than it was last year would support the FMs conclusion.

Answer choices A,C,D & E are quite easy to reject as none of them talk about the acutual amount contributed by IT industry.
Answer choice B says that even though the profits for IT remained constant, their tax contribution increased.

B The profits of the IT sector remained at a steady level despite the fact that it paid more taxes to the national government.

Info in bold is enough to support FM's conclusion.
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Re: Finance Minister: Last year was disastrous for our manufacturing   [#permalink] 05 Apr 2019, 07:56
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