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.