Question

Play the game " the fiscal ship"

1) List two of your main goals in "The Fiscal Ship" and why they are important to you.

2) What are the two largest or most important policy changes that you made in “The Fiscal Ship”? How did these affect the budget?

CAn you help me with reduce inequality and invest to the future

Answer 1

1. The two important goals for me would be-

A. Increasing per capita income

B. Reduction of imports across sectors

Increasing per capita income would have positive impact on the growth rates of the real GDP as it would create demand in the economy while also promoting economic sustainability of the society.

Reduction of imports would mean more favourable balance of trade and would enhance the economic strength of the country at global level.

2. The two important policy changes in the budget for achieving the above two goals would be-

1. Offering tax incentives for companies employing greater numbers of workers than their average strength of the last three years.

2. Offering tax breaks and subsidies to new manufacturing units for the products in which the current demand is met by imports.

Impact-

A.The tax incentives for companies employing greater numbers of the workers is most likely to reduce tax revenue from the corporations but it is going to increase tax revenue from the additional number of individuals finding employment at the corporations. Thus it would partially offset the losses experienced in the tax revenue shortfall from the corporate sector. Additionally, the demand created by enhanced incomes would generate more taxes and offset losses.

B. Reducing imports would mean loss of tax revenue from tariffs. Additionally, providing tax braek and subsidies to the import substituting industries would mean further losses for the treasury. However, these losses may partially be offset by increased employment and demand generation for resources in the supply chain of new industries and thus help generate a stream of taxes.

Reducing inequalities and investing in future would require promoting the low per capita income communities in education and employment. Funding their education and helping them find the opportunities for gainful employment is essential to achieve the same.

For this, initial greater investments in education systems would be needed. This is expected to enhance welfare expenditure of the budget. In effect it also calls for a progressive taxation i.e. taxing the richer more than the poor. However, in the long run it is going to reduce inequalities and promote sustainable future for the society.