Many local governments rely on sales taxes for much of their revenue. When they have budget shortages, why do they not simply raise rates as needed?
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It isn't simply easy as the government cannot suddenly raise the rate of taxation. It can be increased to only a specific limit otherwise the public will oppose the taxation system.
But if there is the shortage of revenue the government can make use of deficit financing or it may take loan from the world bank.
Hope it helps you
It isn't simply easy as the government cannot suddenly raise the rate of taxation. It can be increased to only a specific limit otherwise the public will oppose the taxation system.
But if there is the shortage of revenue the government can make use of deficit financing or it may take loan from the world bank.
Hope it helps you
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