Question

Discuss the way tax law shapes social policy by methods such as imposing "sin-taxes," and also by preferential taxation in some areas, and by allowing certain deductions in others. What does this mean? Does it work? Good idea? Bad idea?

Answer 1

Tax law shapes social policy by imposing sin taxes.

This can be understood as follows:

Sin tax is a tax imposed on purchase of hazardous products like alcohol, tobacco, gambling etc....

These taxes usually discourage people to purchase hazardous items thus establishing a balanced social policy.

Example of Preferential taxation:

If a taxpayer is an SC and he is minimum wage earner he is exempt from income tax.

The tax law also provides certian deductions to others who are eligible for such deduction.

Thus the tax law shapes social policy by imposing sin taxes and by preferential taxation and also by allowing certian deductions to others.

Does it work?

This works beacuse the people wont deny this because only people who are involved in sin activities are imposed sin taxes and others are exempted. This also receives support from the people in maintaining the harmony of people.

Good idea? Bad idea?

This is a good idea as it maintains the social policy of our society rather than concentrating on revenue. It also safeguards the health of those people who are restricted to buy such hazardous goods.