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JAMB Economics 1980 Question 24

Question 24

Public Finance

Mr. A earns N300 and pays N15 in tax. Mr. B earns N100 and pays N6 in tax. This tax system can be described as

  1. A.proportional tax
  2. B.progressive tax
  3. C.competitive tax
  4. D.excise tax
  5. E.regressive tax.
Show the answer and explanation

Answer: E (regressive tax.)

Explanation

Mr A pays 15/300 = 5% while Mr B pays 6/100 = 6%; the poorer man pays a higher rate, so the tax is regressive.