The Uses of Taxes in the Economy

What are the uses of taxes in our economy and how does it affect it in the long run?

The Uses of Taxes in the Economy
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Tax rates generally affects our economy. In this article we will discuss what does economic theory suggest about the relationship between economic growth and taxation and what are the various uses of taxation.

In order to provide the citizens with all their needs, the government must produce enough amount of money for the financing. As we all know the government is responsible for providing the people with several services that the people need such as hospitals, sanitation etc.

  • Health:- The government should build hospitals and provide different health services to the public.
  • Communication and technology:- It is till the responsibility of the government to established linkages of communication and transportation to the different places throughout the country.
  • Defense:- The government should provide security to the people by providing the armed forces the armaments as well as establishing national defense program. In food security; still the government should ensure the production of sustainable food for the people.
  • Sanitation:- The government should established proper sanitation for a clean environment. In the maintenance of the natural resources; it is the responsibilities of the government to utilize ensures and protect the natural environment.
  • Energy:- The government is responsible for the sustenance of energy supply for the countries use. These are just among of the many functions of the government among others.

In order to deal with all of these, the government needs a huge amount of money to cater with all the finances. All of the above mentioned services needs fund to run.

The funds for paying the workforce such as the doctors, the teachers, the soldiers and the other professionals that are hired by the government for their services.

How does the government produce funds for this? The answer is through the method of taxation. Taxes are collected by the government from the different peoples, establishments, organizations, companies and institutions all over the country.

Taxes are collected from products or services in the market and with these the government is able to produce fund for all its expenses. Because of further needs of fund and to be able to provide better services, government officials realizes that there is a need to collect more taxes. With this the VAT or value added tax was implemented in the taxation program.

As they say, VAT assures us that better services will be implemented by the government as they collect additional fund from taxes taken from tax. The vat calculation has been made and we can see this as we purchased items or services from the different establishments, or in malls or stores. With this, the public expected that there would be a better service that is way ahead.

The vat calculation that we can see from the products or services that we purchase allows us to see how much we provide and contribute to the government.


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