Question

Give two merits of a proportional tax system.

Answer 1

The principle of equality in tax levy can be secured by taxing all taxpayers at a uniform equal rate. This is known as proportional tax

1. A proportional tax is simple, easy to understand and easy to calculate as a uniform rate is charged.

2. Under the proportional tax, the relative economic status of all taxpayers remains unchanged because all pay tax at a uniform rate regardless of their incomes.