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Government Levies a tax of 5 percent on a pack of 5KG Rice worth Re1000. Understanding Regressive Nature of Indirect Taxes. As explained above, proportional taxes are regressive taxes. State consumption tax structures are particularly regressive, he said, with an average 7% rate for the poor, a 4.6% rate for middle incomes and a 0.9% rate for the wealthiest taxpayers nationwide. (c) Regressive Taxation: “A schedule of regressive tax rate is one in which the rate of taxation decreases as tax base increases”. Regressive Tax . If shoppers pay a 6% sales tax on their groceries whether they earn $30,000 or $130,000 annually, those with lesser incomes end up paying a … N,2000) and Mr. B earns a taxable income of N15,000 and pays 20% as tax (i.e. Regressive assimilation definition, assimilation in which a following sound has an effect on a preceding one, as in pronouncing have in have to as [haf], /hæf/, influenced by the voiceless (t) in to. Families in lower income brackets pay a larger percentage of their earnings to sales tax tha… Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Taxing Progressive tax—a tax that rises in percentage terms as income rises (income tax) Regressive tax—a tax that falls in percentage terms as income rises (social security) 4. income or stock of wealth being tax) increases. Regressive Tax: This is the tax which decreases as the tax base (i.e. They are called so as the burden of taxation falls directly on the tax payer. Rich Individual Case (Monthly Earning 1 Lakh) He buys the rice pack and pays a tax of 50 Re. See more. Tax Burden on the Pack: 5/100*1000= 50 Re. Taxes that are unrelated to the taxpayer’s ability to pay are regressive. This presentation takes a high-level of the environment including key areas of focus along with miss information that is being spread by both sides of the clim… 3,000). Regressive tax, tax that imposes a smaller burden (relative to resources) on those who are wealthier.Its opposite, a progressive tax, imposes a larger burden on the wealthy.A change to any tax code that renders it less progressive is also referred to as regressive. These types of taxes are common in state-level sales taxes but not common at the federal level. For example Mr. A earns N20,000 taxable income and pays 10% as tax (i.e. The goods and services commonly include tobacco, Direct Taxes. The regressive tax system; Sin Tax Sin Tax A sin tax is a tax levied on goods or services that are considered to be harmful or costly to society. Regressive Tax Regressive Tax A regressive tax is a tax applied in a way that the tax rate decreases with the increase of the taxpayer’s income. Anyone who remembers the 2012 presidential campaign will remember a famous proportional tax proposal, the 9-9-9 Plan. 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