Proportional Tax

• This is the system of taxation where the marginal rate of tax remains constant as income increases or decreases. It takes the same percentage of taxpayers’ income any level of income. Examples include Petroleum Profit Tax (85%), Capital Gains Tax (10%), etc

Regressive Tax

• This the system of taxation where the marginal rate of tax decreases as income increases. It takes a smaller percentage of taxpayers’ income as income increases. Example includes Consumption/Expenditure Taxes like Value Added Tax (VAT), Poll Tax which is levied at a fixed rate per person regardless of income, and Toll Duty.