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 Form 4 Business Studies online lessons on public finance

Definition of a proportional tax with an example

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Answer Text:
Proportional Tax
This is a type of tax where the rate of tax remains the same irrespective of the level of income or value of property to be taxed e.g. if the rate is 20% then a person who earns ksh.5000 will pay 20/100X5000=ksh.1000 Ksh.10, 000 will pay 20/100X10,000=ksh.2000 e.t.c
Example: corporation tax where companies are expected to pay a fixed proportion of their profits as tax.


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