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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
The state can promote economic development by ______.
A policy under which the government uses its expenditure and revenue to produce desirable effect and avoid undesirable effects on the national income, production and employment. This defines ______.
The tax whose rate remains unchanged irrespective of the income of the taxpayer is called as ______.
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- House tax
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Give an example of Indirect tax.
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An indirect tax can be made progressive by imposing higher tax rates on luxuries. Justify the above statement.
