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Subjects · Leaving Cert Economics

Leaving Cert Economics: Taxation

How often Taxation comes up on the Economics papers, every year it was asked, and questions to try.

HL Asked on 5 of the last 5 Higher Level papers, most recently in 2025. banker

OL Asked on 5 of the last 5 Ordinary Level papers, most recently in 2025. banker

Taxation, Higher Level(7 marks)

Quick ones on Taxation.

(a)Which is a direct tax?
  1. VAT
  2. Income tax
  3. Excise duty
(b)A progressive tax is one where…
  1. Lower earners pay a larger share of their income
  2. Everyone pays the same amount of tax
  3. Higher earners pay a larger share of their income
(c)Why is VAT described as regressive in effect?
  1. It takes a larger share of low incomes
  2. Only high earners have to pay it
  3. Its rate rises as a person's income rises
Show the answers

(a) Income tax

(b) Higher earners pay a larger share of their income

(c) It takes a larger share of low incomes

Your turn: Higher Level questions on Taxation.

Higher Level

Asked on 5 of the last 5 Higher Level papers, most recently in 2025. banker

Every paper, year by year

YearWhere it came up
2025Q12
2024Q12, Q13, Q16
2023Q2, Q6, Q12, Q13
2022Q13
2021Q12

Links open the State Examinations Commission’s paper for that year.

More Taxation questions

Taxation, 2 marks

The canon of equity says a tax should…

  1. Be cheap to collect
  2. Be paid at a convenient time
  3. Be based on ability to pay
Show the answer

Be based on ability to pay

Equity means fairness: those with higher incomes should pay more. Economy (cheap to collect) and convenience are separate canons of taxation.

Taxation, 2 marks

A tax takes 20% of every income, whether low or high. It is…

  1. Regressive
  2. Proportional
  3. Progressive
Show the answer

Proportional

A proportional (flat) tax keeps the same average rate at all incomes. A progressive tax takes a rising share as income rises; a regressive one a falling share.

Taxation, 3 marks

Suppose tax is 20% on the first €40,000 and 40% on income above that. How much tax is paid on €50,000?

  1. €12,000
  2. €20,000
  3. €10,000
Show the answer

€12,000

20% × €40,000 = €8,000, plus 40% × €10,000 = €4,000, so €12,000 in total. €20,000 wrongly applies 40% to all income; €10,000 applies 20% to all.

Ordinary Level

Asked on 5 of the last 5 Ordinary Level papers, most recently in 2025. banker

Every paper, year by year

YearWhere it came up
2025Q4, Q16
2024Q14, Q16
2023Q7, Q12
2022Q15, Q16
2021Q14

Links open the State Examinations Commission’s paper for that year.

More Taxation questions

Taxation, 2 marks

A tax on income paid directly to Revenue is?

  1. An indirect tax
  2. A customs duty
  3. A direct tax
Show the answer

A direct tax

Direct taxes are paid on income or wealth straight to Revenue, like income tax, corporation tax and capital gains tax.

Taxation, 2 marks

Which is an indirect tax?

  1. Corporation tax
  2. VAT
  3. Income tax
Show the answer

VAT

Indirect taxes are charged on spending. The seller collects VAT or excise duty in the price and passes it on to Revenue.

Taxation, 2 marks

A progressive tax is one where?

  1. Higher earners pay a higher share of income
  2. Everyone pays the same amount
  3. Lower earners pay a higher share of income
Show the answer

Higher earners pay a higher share of income

With a progressive tax the percentage paid rises as income rises, like income tax with a higher rate on higher income. It helps reduce inequality.

Other Economics topics

All of Leaving Cert Economics