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WAEC Economics 2000 Question 31

Question 31

Public Finance

The main feature of regressive taxation is that its rate

  1. A.is higher when income is higher
  2. B.is equal tax for all categories of people
  3. C.remains constant when income increases
  4. D.reduces when income increases.
Show the answer and explanation

Answer: D (reduces when income increases.)

Explanation

A regressive tax takes a smaller percentage of income as income rises, so the rate falls as income increases.