A local authority proposes a compulsory annual household tax. Table 1 shows how the tax would affect three households.
| Annual household income | Annual tax paid | Tax as a percentage of income |
|---|---|---|
| £16,000 | £480 | 3.00% |
| £32,000 | £480 | 1.50% |
| £64,000 | £480 | 0.75% |
Which statement correctly classifies the proposed tax shown in Table 1?
Regressive, because the percentage of income paid falls as income rises
Proportional, because every household pays the same cash amount in tax
Cannot be classified, because the tax payment is fixed at £480
Progressive, because the cash income remaining after tax rises with income
75 exam-style questions on AQA GCSE Economics 2.1 Introduction to the national economy, covering 2.1.1a What an interest rate is, 2.1.1b Interest rates and consumer decisions, 2.1.1c Interest rates, producer decisions and calculations, 2.1.2a UK government revenue and spending, and 2.1.2b Direct, indirect and progressive taxation. Each one has a worked solution and a mark scheme showing where the marks go.