How GST is a regressive tax? Explain.
Dear student,
Goods and service tax(GST) is an indirect tax levied on the supply of goods and services. It is a nationwide tax seeking to unify several indirect taxes and is based on the principle of 'One nation One tax'.
GST is regressive in nature because it is not based on the principle of ability to pay. All the consumers, including the economically weak bear the burden of the indirect taxes equally. The rich and the poor consumers have to pay the same rate of GST on certain commodities of mass consumption. This may further increase the income disparities between the rich and the poor people of the society.
Goods and service tax(GST) is an indirect tax levied on the supply of goods and services. It is a nationwide tax seeking to unify several indirect taxes and is based on the principle of 'One nation One tax'.
GST is regressive in nature because it is not based on the principle of ability to pay. All the consumers, including the economically weak bear the burden of the indirect taxes equally. The rich and the poor consumers have to pay the same rate of GST on certain commodities of mass consumption. This may further increase the income disparities between the rich and the poor people of the society.
Regards