WAEC - Economics (2011 - No. 36)
A tax is regressive if the
rate of tax is constant at all income levels
rate of tax decrease as income increases
rate of tax increases as income increases
tax is direct rather than indirect
Explanation
A regressive tax is a tax applied uniformly, taking a larger percentage of income from low-income earners than from high-income earners. Regressive taxes place more burden on low-income earners. Since they are flat taxes, they take a higher percentage of income on the poor than on high-income earners.
The taxable rate reduces as income increases, and it increases as income decreases.