Question

The Government can achieve its budget objective of ‘redistribution of income’ by?

• A. a) Rationalization of taxes in pro-poor direction
• B. b) Bringing the production of goods and services under its direct and absolute control
• C. c) Increasing the Gross Domestic Production (GDP) of the country.
• D. d) Managing the general price level in the economy to the desired level.

Answer 1

The correct option is A

a) Rationalization of taxes in pro-poor direction

Answer: The correct answer is option (A) – Rationalization of taxes in pro-poor direction.

Through progressive income taxation, the redistribution objective is sought to be achieved. In this case, when the income is higher, the tax rate is higher. On a proportional basis, the companies will be taxed. The tax rates will be in a particular proportion of the profits.

Petroleum products, tobacco and luxury goods will be taxed heavily, semi-luxuries and comforts will be taxed moderately, and the necessities of life will be taxed at low rates.