Question

Explain the importance of tax.

Answer 1

Importance of Tax:
Taxes are crucial because governments collect this money and use it to finance under the
following social projects.

• Health:

1. Without taxes, government contributions to the health sector would be impossible.
2. Taxes go to funding health services such as social healthcare, medical research, social security, etc.

• Education:

1. Education could be one of the most deserving recipients of tax money.
2. Governments put a lot of importance in the development of human capital and education is central in this development.

• Governance:

1. Governance is a crucial component in the smooth running of country affairs.
2. Poor governance would have far-reaching ramifications on the entire country with a heavy toll on its economic growth.
3. Good governance ensures that the money collected is utilized in a manner that benefits citizens of the country.

• Other important sectors are infrastructure development, transport, housing, etc.

1. Apart from social projects, governments also use money collected from taxes to fund sectors that are crucial for the wellbeing of their citizens such as security, scientific research, environmental protection, etc.
2. Some of the money is also channeled to fund projects such as pensions, unemployment benefits, childcare, etc,