Name five objectives of raising taxes and explain how they are achieved by the government

Objectives of raising taxes

  • Pension of social and merit goods and services by the government such as roads, health, Education etc.
  • Efficient allocation of resources e.g. tax the rich more and use taxes to alleviate poverty among low income groups.
  • increasing taxes, and thus reducing disposable income available on individuals.
  • Protect local industries e.g. raise the customs duty on imports to discourage consumption of import and encourage consumption of local goods and production.
  • Creation of employment e.g. government could impose more taxes to reduce investment in private sector (“crowding out” effects) and invest more in public sector to create employment opportunities.
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