The progressive taxation system seeks to achieve which of the following objectives of the government budget?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Redistribution of income
A progressive taxation system means that tax rates increase with income — higher-income groups pay a larger proportion of their income as tax compared to lower-income groups.
This helps in:
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Reducing income inequalities between the rich and poor, and
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Promoting social equity by transferring resources (through welfare schemes) to lower-income sections.
Hence, the main objective of progressive taxation is the redistribution of income in the economy.