Statement: Should all indirect taxes in India be combined into a single tax on all commodities? Arguments: I. Yes. This will simplify tax collection and reduce administration costs. II. Yes. Manufacturers and traders will benefit, which will in turn boost tax collection. III. No. No other country has adopted such a system. Choose the option that best identifies the strong argument or arguments.

Introduction / Context:
Consolidating indirect taxes aims to streamline compliance and reduce cascading. Evaluating arguments requires considering efficiency, revenue buoyancy, and economic incentives rather than appeals to external practice.

Given Data / Assumptions:

• A single comprehensive tax can reduce classification disputes and logistics frictions.
• Compliance cost reductions can expand formalization and widen the base.
• International systems vary widely; comparators alone do not settle design choices.

Concept / Approach:
Judge which claim offers a concrete, causal mechanism for better outcomes and avoid overbroad or irrelevant claims.

Step-by-Step Solution:
I: Simplification is appealing but may be overstated without addressing rate structure and input credits. As framed, it lacks nuance; we treat it as weaker than II.II: Strong. Lower compliance burden and uniformity can reduce supply-chain costs, expand activity, and improve collections over time.III: Weak. Absence of uniform adoption elsewhere is not proof against efficiency in a specific context.

Verification / Alternative check:
Revenue performance depends on design details (credits, thresholds). The general pro-business compliance effect in II remains policy-relevant.

Why Other Options Are Wrong:
Options including III rely on appeal to others; including I over-generalizes simplification benefits without mechanism detail.

Common Pitfalls:
Assuming simplification alone ensures efficiency; ignoring design specifics.

Final Answer:
Only II is strong