Explain why income tax in the UK is an example of progressive taxation.

In a free market economy like that of the UK, incomes will be very unequally distributed. In order to tackle this issue, the government can use its tax and benefit policy to redistribute income. Progressive taxation enables the government to tax only those people who can most afford to pay it. This type of taxation works in a way that as one’s income rises, one pays a bigger proportion of their income in taxation. On one hand, this type of taxation is fairer and it can be used to directly redistribute income. On the other hand, it can have a disincentive effect, i.e. people may face a disincentive for getting a better- paid job. Finally, direct taxes like income tax can be organised so that they are progressive.