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 at any level of income. Examples include Petroleum Profit Tax (85%), Capital Gains Tax (10%), etc.

Progressive Tax

This is the system of taxation where the marginal rate of tax increases as income increases. It takes a larger percentage of taxpayers’ income as income increases. An example includes Personal Income Tax.

Regressive Tax

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