O-LevelEconomicsGovernment and the macroeconomy2281/12 · Oct/Nov 2019 · Q161 Mark
Why are indirect taxes, such as VAT of 20% on goods and services, described as regressive when comparing high-income and low-income purchasers?
AHigh-income purchasers pay a higher percentage of their income in tax.
BHigh-income purchasers pay a lower percentage of their income in tax.
CLow-income purchasers pay a lower percentage of their income in tax.
DLow-income purchasers and high-income purchasers pay the same percentage of their income in tax.
✓ Correct answer
B: High-income purchasers pay a lower percentage of their income in tax.
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