Fuel and travel costs are pushing prices up again
Thursday 5 November 2026
Inflation has risen to 3.1%, meaning everyday spending is getting more expensive just as household budgets are already under pressure.
Regressive tax
A tax that takes a larger share of income from someone on a lower income than from someone on a higher one.
What it means
To see whether a tax is regressive, compare the tax people pay with their income. Even if a higher-income person pays more pounds, a lower-income person may pay a larger percentage of their income. For taxes on spending, the picture can change depending on whether you compare tax with income over one year or with spending over a longer time. Do not assume every purchase tax is regressive in every comparison.
Example
Imagine a made-up fixed tax of £200 per adult. It takes 2% of a £10,000 income but 0.5% of a £40,000 income. The cash tax is the same; the share is four times as high for the lower income.
Why it matters
It helps show why a tax that looks equal in pounds can have a very different effect on people's budgets.
Also known as
regressive taxation
Related terms
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Effective tax rate
The total tax someone pays, shown as a percentage of the income or other amount being measured.
Read more -
Progressive tax
A tax under which people with more income pay a larger share of it in tax.
Read more -
Value added tax (VAT)
A UK tax added to the price of many goods and services people buy.
Read more
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