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Features of Taxation and the Regulatory Environment

Tax rate structure

There are three types of taxes:

 Progressive taxes: These take an increasing proportion of income as income
rises. (E.g. UK Income Tax – 20%, 40%, 50%)

 Proportional taxes: These take the same proportion of income as income
rises.

 Regressive taxes: These take a decreasing proportion of income as income
rises. (E.g. UK National Insurance contributions – 11% then 1%).

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