A tax system in which the rich pay a higher percentage of income as tax than the poor is known as

Step 1: Analyze the question The question asks for the name of a tax system where the rich pay a higher percentage of their income than the poor. The key phrase is "higher percentage," which is about the tax rate, not the amount of money paid.

Step 2: Explain the concepts

• Progressive taxation: The tax rate rises as income rises. Higher earners pay a larger percentage. Example: Nigeria's Personal Income Tax (PAYE) bands.
• Proportional taxation: Everyone pays the same percentage, whatever their income.
• Regressive taxation: The tax rate falls as income rises, so the poor pay a larger percentage of their income than the rich. Example: a flat charge or tax on basic goods, which takes a bigger share of a poor person's income.
• Capital gains tax: A tax on profit made from selling assets such as land or shares. It is a type of tax, not a system defined by rate structure.
• Sales tax: A tax on goods and services at the point of sale. It is also a type of tax, not a system defined by rate structure.

Step 3: Solve Compare the description with the definitions:

• The rich pay a higher percentage → the rate increases with income → this is progressive taxation.

Eliminating the others:

• A and E are specific taxes, not rate-structure systems.
• C is wrong because the percentage would be equal for everyone.
• D is wrong because it is the opposite: the poor would bear the higher percentage.

Step 4: Answer The correct option is B. progressive taxation.

Exam tip: Think "progress = going up." In a progressive tax, the rate goes up as income goes up. In a regressive tax, the rate goes down as income goes up. In a proportional tax, the rate stays the same.