WAEC Economics 2005 Question 37

Question 37

Public Finance

Mr. Bala's income is $800.00 per month while that of Mr. Jatau is $1,200.00. If Messrs. Bala and Jatau pay $80.00 and $120.00 respectively as taxes, the tax system is

A.progressive
B.regressive
C.proportional
D.ad-valorem.

Show the answer and explanation

Answer: C (proportional)

Explanation

80/800 = 10% and 120/1,200 = 10%: the same rate for both, so the tax is proportional.