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JAMB Economics 1979 Question 26

Question 26

Public Finance

If Mr. A earns N2,000 a year while Mr. B earns N8,000 a year but Mr. A pays N200 per annum in tax while Mr. B pays N400, such a tax is

  1. A.progressive
  2. B.indirect
  3. C.regressive
  4. D.proportional
  5. E.none of the above.
Show the answer and explanation

Answer: C (regressive)

Explanation

Mr A pays 10% of his income but Mr B pays only 5%, so the lower earner pays a higher rate: the tax is regressive.