Question

Why does the government choose to levy taxes?

Why does the government choose to levy taxes?

Homework Answers

Answer #1
  • The government usually levy taxes usually with an aim to earn higher revenues.
  • Taxing the consumption of goods and services that are consumed or produced heavily helps the government in preventing over production or over consumption of certain goods and services that might harm other's.
  • For example, the government usually taxes the consumption of harmful goods like tobacco, alcohol, cigarettes etc.
  • This will not only prevent the abuses that follow their consumption but also helps government in collecting large revenues.
  • That is, when such goods are taxed, some people will refrain from purchasing those goods but others who are addicted will end up paying higher prices to obtain them.
  • This will eventually Increase the revenues that are generated from the taxation on such goods.
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