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What is Regressive Tax
This is where a smaller percentage of tax is charged as a personís income increase. This type of tax system is seen to be unfair to the poor and goes against the principle of vertical equity. Fix taxes can fall under this heading.
E.g. Car tax is a fixed amount. Some may consider a car to be a necessity rather than a luxury, but it takes a larger slice of a poor personís income compared to a rich personís income.
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Term created / updated 2006-07-30 16:32:38
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