Flashcards in Taxation Deck (7)
What is progressive tax?
When those on higher income levels pay a higher % of their income in tax
What is regressive tax?
An increase in income leads to a smaller % of their income going on the tax e.g VAT
What is proportional tax?
Takes the same % of income whatever band
What is direct tax?
Takes from the people's earnings e.g income tax
What is indirect tax?
Paid by firms selling good-- VAT
What are the impacts of increasing rate of income tax? (7)
1. Higher revenues--
2. Tax evasion
3. Incentives to work
5. Aggregate demand
6. Trade balance
7. Discourage FDI