Indirect taxes are generally

Step 1: Analyze the question The question asks what type of tax burden indirect taxes generally create: progressive, regressive, equitable, or proportionate.

Step 2: Key concepts

• Indirect taxes are taxes on goods and services, such as VAT, excise duties, and import duties. The tax is paid when you buy something, and the seller passes it on to the government.
• Progressive tax: the rate rises as income rises (e.g., personal income tax). The rich pay a larger percentage of their income.
• Regressive tax: the burden falls more heavily on low-income earners, because they pay a larger percentage of their income.
• Proportional tax: the same percentage of income is taken from everyone.
• Equitable is a general term for fairness, not a standard classification of tax rates.

Step 3: Apply to indirect taxes Suppose a bag of rice carries 7.5% VAT, so the tax is a fixed amount for everyone who buys it.

• A low-income worker earning ₦50,000 a month spends most of that income on essentials, so a large share of it goes to taxes on goods.
• A high-income earner making ₦1,000,000 a month spends the same ₦1,000 on that item in tax, but it is a tiny fraction of their income.

So the tax takes a larger percentage of the poor person's income. This is the definition of a regressive tax.

Step 4: Answer Indirect taxes are generally regressive, which is option B.

Exam tip: Remember "Direct = can be progressive, Indirect = regressive." Indirect taxes are charged on consumption, and everyone must consume basic goods, so the poor bear a heavier relative burden.