Question

Why the Indirect taxes are termed regressive taxing mechanisms?

• A. They are charged at higher rates than direct taxes
• B. They are charged the same for all income groups
• C. They are not charged the same for all income groups
• D. None of the above is a correct reason

Answer 1

Answer:

B. They are charged the same for all income groups

The indirect taxes like VAT etc are paid by everyone if they buy any product irrespective of financial conditions. Direct taxing is considered the most progressive taxing mechanisms because they justify the income levels of the people