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Eduncle posted an MCQ
October 19, 2019 • 16:50 pm 0 points
  • UGC NET
  • Economics

Why are indirect taxes called regressive ?

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    Eduncle Best Answer

    Indirect taxes are regressive since they are charged equally for all income groups. The rich and the poor pay identical indirect taxes, as percentage of the selling price of a product or service they buy. Indirect tax, unlike direct taxes, are charged on the value of the product or service. Excise duties, sales tax, etc., are examples of indirect taxes which have same impact on all income groups. On the other hand, direct taxes, like income tax, wealth tax, gift tax, are directly levied based on the tax payer's position in the income groups.

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