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WAEC Economics 1998 Question 31

Question 31

Public Finance

Progressive system of taxation implies that the

  1. A.poor pay relatively more
  2. B.tax rate falls as the tax base increases
  3. C.tax rate increases as the tax base increases
  4. D.average and marginal rate of tax will be the same
  5. E.rich and the poor pay the same amount as tax
Show the answer and explanation

Answer: C (tax rate increases as the tax base increases)

Explanation

Under progressive taxation, the rate of tax rises as income (the tax base) rises.