Question:
Which of the following taxes is considered ‘regressive’?
(1) Personal Income Tax.
(2) Corporate Income Tax.
(3) Capital Gains Tax.
(4) Value Added Tax (VAT).
(5) Wealth Tax.
Correct Answer:
(4)
Answer Explanation:
VAT is a flat tax on consumption. Since lower-income earners spend a higher percentage of their income on consumption than the rich, VAT takes a larger percentage of their total income, making it regressive.
Topic: Public Finance Year: 2024
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