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WAEC Economics 1992 Question 24

Question 24

Public Finance

Proportional tax is a tax whose

  1. A.percentage rate remains constant as the tax base increases
  2. B.percentage rate increases as the tax base increases
  3. C.percentage rate decreases as the tax base increases
  4. D.percentage rate fluctuates as the tax base increases
  5. E.burden falls heavily on consumers.
Show the answer and explanation

Answer: A (percentage rate remains constant as the tax base increases)

Explanation

Under a proportional tax everyone pays the same percentage whatever their income.