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What do you understand by 'regressive taxation'?
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- Taxation where the tax rate falls as taxable income rises.
- Taxation where the tax rate increases irrespective of fall or rise in taxable incomes.
- Taxation where the rate increase with the increase of taxanle income
- None of above
Correct Option: A
A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases. a Regressive tax imposes a greater burden (relative to resources) on the poor than on the rich- there is an inverse relationship between the tax rate and the taxpayer's ability to pay as measured by assets, consumption, or income.
