Question : Indirect taxes by nature are:
Option 1: degressive
Option 2: regressive
Option 3: progressive
Option 4: proportional
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Correct Answer: regressive
Solution : The correct option is regressive.
Indirect taxes are considered regressive because they take a larger percentage of income from lower-income individuals. This is because these taxes are applied uniformly to goods and services without regard for the individual's income level. As a result, people with lower incomes end up spending a larger proportion of their earnings on necessities, which are subject to these taxes.
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