Purposes of taxation

Taxation has, as its primary concern, a revenue-raising purpose. Also, it has non-revenue purposes.

[1] It aims to raise funds to enable the government to fulfill its purpose of serving and protecting the people.
[2] It may be used to implement police power to promote the general welfare of the people.
[3] It may be used to regulate activities or industries.
[4] It may be used to reduce social inequality. Richer people pay more tax and the concentration of wealth is lessened.
[5] It may be used to encourage economic growth. Investment may be encouraged if there are grants of tax exemptions and other benefits. Small businesses and pioneer industries are encouraged via tax breaks.
[6] It may be used to protect local industries.