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Difficulty: EasyTypes and Systems of Taxation

An individual earns a taxable annual income of N500,000\text{N}500,000. Under a proportional tax system with a fixed tax rate of 15%15\%, calculate the total tax paid in Naira.

Answer: 75000 Naira

Answer

The total tax paid by the individual is 75,000 Naira.
In a proportional tax system (flat tax), the same percentage rate is applied regardless of income. Multiplying N500,000\text{N}500,000 by 15%15\% (0.150.15) results in a tax liability of 75,00075,000 Naira.

Step-by-Step Solution

1
Identify the given income and the proportional tax rate.
Taxable income = N500,000\text{N}500,000, Proportional tax rate = 15%15\%.
A proportional tax applies a constant percentage rate to all income levels.
2
Calculate the amount of tax paid.
Tax Paid=0.15×500,000=75,000\text{Tax Paid} = 0.15 \times 500,000 = 75,000 Naira.
Applying the 15%15\% flat rate to the annual income determines the exact monetary tax liability.

Key Concept

Proportional Tax System
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Topics

Types and Systems of Taxation

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