Question

State any two ways in which the fiscal policy can be used to achieve the objective of equity:

Answer 1

• Taxation can be made progressive, where higher taxes are levied on luxury goods and the wealthy, ensuring that the tax burden falls more on the rich. At the same time, the poor can be exempted from taxes, and lower tax rates can be applied to essential goods.
• Government spending should focus on activities that support low-income groups. For instance, investment in services like education and public healthcare can be increased, and these services should be made available to the poor either free of cost or at subsidized rates.