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Question
The government imposes tax ______.
Options
To raise revenue
To reduce inequalities of income and wealth
Both to raise revenue and to reduce inequalities of income and wealth
Neither to raise revenue nor to reduce inequalities of income and wealth
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Solution
Both to raise revenue and to reduce inequalities of income and wealth.
Explanation:
- The government imposes taxes to raise revenue for funding public services, infrastructure, and other government activities.
- Taxes are also used to reduce inequalities of income and wealth by redistributing wealth through progressive taxation and social welfare programs.
RELATED QUESTIONS
Taxes in which the rate of tax remains the same, though the tax bases changes are called ______.
Match the following and select the correct option:
| Column A | Column B | ||
| (i) | Taxes imposed on income and wealth | A. | Regressive |
| (ii) | Taxes imposed on goods and services | B. | Progressive |
| (iii) | A tax system where the rate of tax decreases with increase income | C. | Direct taxes |
| (iv) | A tax system where the rate of tax increases as income increase | D. | Indirect taxes |
The major objective of monetary policy is ______.
Which of these taxes is most likely to be progressive?
Name any two instruments of Fiscal Policy.
How can tax be used as an instrument to bring about equitable distribution of wealth and income?
Classify the following types of tax into direct and indirect taxes:
- Entertainment tax
- Income tax
- House tax
- Sales tax
State two drawbacks of direct taxes.
How does the state fulfil the following socio-economic objective?
Environmental protection.
Citing reasons state the superiority of Fostering civic consciousness by direct tax over the same by indirect tax.
