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A-Level Economics · Indirect tax diagram question

EVALUATION: Why are indirect taxes criticised as REGRESSIVE?

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They take a larger PROPORTION of income from low-income households. A £4 tax is a bigger slice of a small income — the burden concentrates on those already worse off, and inequality widens. Regressive = a larger share of a POOR household's income goes on the tax. The pain concentrates at the bottom — amplified when demand is inelastic, because more of the tax passes through to consumers.

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