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Taxation and Growth - Essay Example
Author : strackemaximill
Finance & Accounting
Pages 7 (1757 words)
This essay describes the tax policy, that is an instrument that policy makers of a certain state make in order to assist in collection of taxes. The researcher discusses that tax policy can be used to stimulate economic recovery and growth in various ways in the U.K…
This essay is based on the fact that, various economies can be faced by a recession, which can be dangerous. According to Larch and Nogueira use of fiscal measures comes in handy to help the economy be able to recover and also increase its growth rate. These fiscal measures ensure that the supply of money in the economy is controlled to avoid excess money supply, which fuels inflation. In addition, the fiscal measures help the government to be able to stimulate aggregate demand and in the long-run increase the growth rate. The government needs a lot of funding to be able to achieve its budget. This is mainly from taxes that are collected according to different bases and finance the budgets. Therefore increasing the taxes means that the government is able to collect a lot more resources that usable to stimulate the economy through investments and hence lead to increased growth rate. During this analysis, this essay has found that as much there are various benefits of using the fiscal policy to gain economic recovery and growth, there are also negative effects as earlier mentioned. These include unemployment, low savings and investment, high prices for basic goods and many others. The researcher of this essay also recommends that various policy makers should take into account these negative effects in order to be able to attain growth in the end. Finally, in order to safeguard an economy from suffering a recession, it is essential to be able to guard against the factors that may lead to a recession. ...