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GCE Economics 1990 Question 16

Question 16

Public Finance

Regressive tax is not a good tax system because it

  1. A.is not convenient to pay
  2. B.is not certain what to pay
  3. C.is not economical to collect
  4. D.does not ensure equity in payment
  5. E.is not neutral to price trends.
Show the answer and explanation

Answer: D (does not ensure equity in payment)

Explanation

A regressive tax takes a bigger share of a poor person's income than a rich person's, so it is not fair (equitable).