Question

How can the government reduce inequalities of income through the budget?

Answer 1

The government the budget can achieve to reduce inequalities in the distribution of income and wealth in two ways:

(a) By imposing higher taxes on the income of rich and the goods consumed by the rich, which will reduce the disposable income of the rich.

(b) Increasing government expenditure by providing free services to the poor like education, medical facilities etc. This will raise the disposable income of the poor. Thus, the gap between rich and poor can be reduced.