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• Increase in employment. Funds collected from taxes can be used on public works programmes which creates employment opportunities.
• Raising revenue. Taxes are the major source of government revenue. The government needs revenue to maintain peace and integrity in the country, to increase social welfare and to complete development programmes.
• Social welfare. The consumption of some commodities is harmful to the citizens for example consumption of alcohol. To discourage the high consumption of these commodities, the government imposes taxes to them to make the commodities more expensive.
• Fair distribution of income. Taxes are imposed to achieve equality in the distribution of national income. The rich are taxed higher and the amount obtained are spent on increasing the welfare of the poor.
• Economic stability. During inflation, the government imposes high taxes in order to discourage the unnecessary expenditure of individuals.
• Protection policy. Heavy taxes are imposed on the imported goods from other countries which compete with local goods thus making them expensive. The consumers are therefore encouraged to buy the locally produced and low priced goods and services.
Musyoxx answered the question on February 28, 2018 at 15:45
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