Explain how can government budget be helpful in altering distribution of income in an economy.Explain
Answers
Even distribution of income, wealth and social welfare is one of the main objective of budgetary policy. The government uses progressive taxation policy to reduce the inequalities of income and wealth in the country. People with higher incomes are levied higher rate of tax and people with lower income are levied lower rate of tax. People with income below a certain limit are not levied any direct tax altogether.
On the other hand, the government spends these tax receipts on granting subsidies and providing other public services such as health and education, to people of lower income groups, thus, the wealth gets redistributed and reduction in inequalities is achieved.
answer
budgetary policies are useful medium to reduced inequalities of income modicare distribution of income government can be used tax policies and public expenditure as a tool government can reduce the disposable income and wealth of rich by imposing habitat and can spend more on providing free service to poor it rise the disposable income and welfare of poor