Tax - progressive tax question
Matt444
Registered Posts: 36 Regular contributor ⭐
I have come across the below question in my studies and the model answer to it is 'A'. Would answer A not be deemed a proportional tax and the answer be D where the tax rate increases with earnings? I'm confused as to why 'A' would be the answer...could it be a text book error?
Which of the following could be said to be a progressive tax?
A - Property sales tax of 1% of the selling price of all properties sold
B - Value added tax at a rate of 0%, 10% or 15% dependent on goods or services provided
C - Corporate wealth tax of 2% of total net assets up to £10 millionthen at 0.5% for assets greater than £10 million
D - Personal Income tax of 10% on earnings up to £10k then at 15% from £10,001 to £100k and 25% over £100k
Which of the following could be said to be a progressive tax?
A - Property sales tax of 1% of the selling price of all properties sold
B - Value added tax at a rate of 0%, 10% or 15% dependent on goods or services provided
C - Corporate wealth tax of 2% of total net assets up to £10 millionthen at 0.5% for assets greater than £10 million
D - Personal Income tax of 10% on earnings up to £10k then at 15% from £10,001 to £100k and 25% over £100k
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Comments
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Imo the rest b-d are tiered tax.0
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I'm with Matt, D seems to the answer as the more you earn, the greater the proportion of the earnings are taxed.0
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My guess would also be to go for D.
If I would have to classify them, I would go for:
A is proportional, C is regressive and D would be progressive.0 -
Is this a CIMA or ACCA question?0
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My thoughts exactly Steve and Rinske. I just can't see how 'A' can be anything over than a proportional tax.
Slackda, it's a CIMA (F1) Financial Operations question.0 -
erm.....what text book is it from, the officail CIMA ones are riddled with typos etc.
i agree with you that in an exam i would answer D but having sat the exam i am suspicous over these types of questions.0
