Question

Topic/ All government activities should be financed with a benefit tax.
write an essay in which you argue the statement is true. Use a diagram of an economic model if it helps in making your argument. Your essay should be 500-600 words

Answer 1

Benefit Tax is taking out some part of tangible monetary benefit away from beneficiaries by imposition of tax on the funds through which benefits will be extended to the general public under different government programmes. This implies the beneficiary who was supposed to get a certain amount of benefits say ‘X’ will now get X-X’ where X’ is benefit tax. It could be imposed following slab rate or a certain % but the end result is the loss of assistance from the total sum of benefits. This is working well in some communist countries as they say – there are no free lunches in the world. However, it has been seen that such imposition encourage bribery in the economy. We shall see the downsides of such an imposition in the essay.

a) Un-Welfare state: The government is supposed to act as a welfare state for the citizens of the country. There-by meaning providing them civic amenities at no cost for the betterment of livelihood. A handful of government activities are financed for the benefit of the state – levying a charge on the finance means some of the people will be devoid of the proposed benefits. There by defeating the whole purpose and existence of the aforesaid concept. And adversely impacting the economic and social well being of the people.

b) Bad Governance: The imposition may increase the chances of making false money through corrupt hands. The department collecting the benefit tax may enter into overriding adjustment with the tax-payer for a certain sum of benefit in return the levy will be less and can be further retained by the tax payer for his own private affairs. The is a successful beginning of corrupt practice in the economy that has the tendency to be contagious and fatal for benefits extended to general public. This may also bring ill-repute to the ruling government.

c) Health & Safety: These impositions are like jeopardising the very existence of people and general benefits enjoyed by them through various government programme. The levied part means somebody in public is going to have to without the benefit. The price of facility will increase with the decrease in the sum allocation for facilitating these services through imposition of benefit tax. Over the period of time it may be clearly evident how the cut has considerably affected the health & safety of general public. This could have an adverse impact on Health Services, Education facilities, Safety & Sanitation facilities etc in the economy.

In a nutshell it against the overall of health of prospering economy to impose benefit tax on goverment facilities.