GCEEconomicsPublic Finance2021

A tax is said to be regressive when

Ait is levied only on luxury goods
Bit takes a higher proportion of income from low-income earners than from high-income earnersCORRECT
Cthe government reduces the tax rate during an economic boom
Dit is collected directly from the taxpayer by the government
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Why the answer is B, and why the others tempt you.
A regressive tax imposes a greater relative burden on lower-income individuals because, although the nominal rate may be the same, it represents a higher proportion of a poor person's income. Value Added Tax (VAT) is a common example. This is the opposite of a progressive tax.
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