(i) Solve balance of payment deficit.
Government taxation can be used to reduce importation hence solve balance of payment deficit.
(ii) Protection of local industries.
Through taxing imports, they will become expenditure hence discourage their consumption,people will hence buy local goods.
(iii) Provision of essential goods/ services.
The government is able to provide these goods from the funds collected.
(iv) Control consumption of certain goods.
The government can discourage consumption of certain goods in order to reduce their impact on people's health by taxing.
(v) Promote balanced regional development.
Funds collected can be used to start up projects in areas that are under developed/ discourage localization by heavily taxing firms in localized areas.
(vi) Promotes economic stability.
Funds collected are used to solve problems such as unemployment through increasing public expenditure.
(vii) Redistribution of wealth: This is done by the government taxing the rich and using the money to provide essential goods/ service to the poor.
(viii) Creates conducive business environment.
Through public expenditure the government can develop infrastructure to enable businesses to thrive.
maurice.mutuku answered the question on August 12, 2017 at 09:22
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