Question

Q. In which of the following instances the imposed tax is said to be a “Progressive tax”?

Select the correct answer using the code given below:

• A.
  1 only
• B.
  1 and 2 only
• C.
  1 and 3 only
• D.
  2 and 3 only

Answer 1

The correct option is A

1 only
Explanation:

A progressive taxation implies imposing taxes according to the income earning capacities of the people.
A regressive tax is a tax applied uniformly, taking a larger percentage of income from low-income earners than from high-income earners.
A proportional tax or flat tax impacts low, middle, and high-income earners relatively equally.

Statement 1 is correct: It is an example of progressive tax. This is because higher income earners pay a higher percentage of taxes than do lower-income earners.


Statement 2 is incorrect: It is not an example of progressive tax. This is because the movie tickets will be sold at the same rate for all the sections of the society regardless of their income status.

Statement 3 is incorrect: It is not an example of progressive tax. This is because the Duty levied on imported salt will be the same for all the sections of the society regardless of their income status.