WAEC Economics 2020 Question 41

Question 41

Public Finance

Mr. X and Mrs. Y pay $500.00 and $1,400.00 as taxes on their earnings of $5,000.00 and $7,000.00 respectively. The system of taxation employed is

  1. A.specific tax.
  2. B.proportional tax.
  3. C.regressive tax.
  4. D.progressive tax.
Show the answer and explanation

Answer: D (progressive tax.)

Explanation

Mr X pays 10% and Mrs Y 20%: the rate rises with income.