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Question
Differentiate between progressive and regressive taxes giving an example for each.
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Solution
| S. No. | Progressive tax | Regressive tax |
| 1. | Under progressive taxation, the rate of tax increases as tax payer's income increases. | A regressive tax is one in which the rate of tax decreases as the tax payer’s income increases. |
| 2. | It has more financial impact on higher income individuals. | Regressive taxes have a greater impact on lower income individuals. |
| 3. | It is based on the principle of ability to pay. | It is not based on the principle of ability to pay. |
| 4. | Example - Income tax. | Example - Sales tax. |
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RELATED QUESTIONS
The government imposes tax ______.
Match the following and select the correct option:
| Column A | Column B | ||
| (i) | Taxes imposed on income and wealth | A. | Regressive |
| (ii) | Taxes imposed on goods and services | B. | Progressive |
| (iii) | A tax system where the rate of tax decreases with increase income | C. | Direct taxes |
| (iv) | A tax system where the rate of tax increases as income increase | D. | Indirect taxes |
Monetary policy means regulation of money supply by the monetary authority.
Which of the following taxes generate civic consciousness among people?
Differentiate between direct and indirect taxes.
'The role of the State is important in developing the economic infrastructure of a developing economy'. Give two reasons to support your answer.
How does the state fulfil the following socio-economic objective?
Promoting industrial growth.
Define a tax.
Citing reasons state the superiority of Progressive tax over regressive tax.
Citing reasons state the superiority of Fostering civic consciousness by direct tax over the same by indirect tax.
