Question

Distinguish between a tax and a subsidy.

Answer 1

Tax	Subsidy
A tax is a compulsory contribution from a person to the Government to defray the expenses incurred in the common interest of all without reference to special benefits incurred Ex. Income tax, sales tax etc.	A subsidy is privileged made by the Government to bridge the gap between the price paid by the consumer of the product or service and the average cost of production of that product. Ex. subsidy given to sugarcane farmers.