Question

What is meant by regressive taxation?

Answer 1

Regressive taxation is a type of taxation by the government in which a larger percentage of the income is taxed from the low income groups than the higher income groups. In regressive taxation, the taxes are uniform irrespective of the income of the tax payers. i.e the same taxes apply to all income groups. Indirect taxes such as Excise duty, Custom duty, etc are mostly regressive in nature whereas direct taxes are progressive in nature eg income tax, property tax, etc in which the taxes change with different income slabs. In progressive taxation, lower income groups are charged less taxes than the higher income groups.