economics exam question need help

[lalor]

apart from the carbon tax, discuss two other ways the government uses the tax system to acheive a more efficient allocation of resources. (4 marks) please help

[morantz]

apart from the carbon tax, discuss two other ways the government uses the tax system to acheive a more efficient allocation of resources. (4 marks) please help

Company tax perhaps? It targets the efficiency in production, hence it gives the firm an indication of what to produce in the long term, as it would most likely drive the firms out of the market in the short term. I honestly can't think of anything else.

[morgs21]

Taxes on goods such as cigarettes and alcohol to discourage their consumption and production, hence resources are reallocated to more desirable areas that will benefit society.

Not sure about another one though it's a tough question...

I don't know if you'd be able to talk about company tax because the tax itself increases production costs and is the same rate for all firms...

[Nima2703]

Taxes on goods such as cigarettes and alcohol to discourage their consumption and production, hence resources are reallocated to more desirable areas that will benefit society.

Not sure about another one though it's a tough question...

I don't know if you'd be able to talk about company tax because the tax itself increases production costs and is the same rate for all firms...

Great answer =)

[redxman]

Capital Gains tax means that house prices don't increase due to speculative investment.

[Nima2703]

Capital Gains tax means that house prices don't increase due to speculative investment.

huh?

[AznSkillZ]

there is also indirect taxes such as tariffs, by removing tariffs, business are forced to become more internationally competitive thus local firms must allocate their resources in areas of compartive cost advatage to lower their costs, local firms could do this by using the better technology or increasing labour productivity. hope this helps

[redxman]

Capital Gains tax means that house prices don't increase due to speculative investment.

huh?

From Wikipedia: Capital gains tax (CGT) in the context of the Australian taxation system applies to the capital gain made on disposal of any asset, except for specific exemptions

If it wasn't for this tax people would purchase property and sell it straight away. If this was the case than the prices will go up. The tax forces people to wait (two years, I think) until they can sell the property.

[link125]

You shouldn't have to limit yourself to a tax that was made for a specific purpose.

Why not do income taxes and relate it to a specific outlay of the governments that helps achieve an efficient allocation of resources?

Individual income taxation makes up a large portion of the government's revenues. The revenues from income taxation are used in a variety of ways such as being used to increase expenditure on infrastructure such as roads. Such a use of revenues from the income tax allows the government to achieve a more efficient allocation of resources, as they are able to provide funding towards a particular area of the economy that ultimately improves the living standards of society, as roads are improved and expanded upon for all Australians to use.

[lolwutxx]

GST replacing the Wholesale Sales Tax
WST - distorted the market as it placed adhoc taxes on different industries. Such as 17% tax on luxurys, 5% on food, 11% on clothes (made up % for the example )

So the GST replaced this system by putting a broad tax on most goods and services (10%)

More efficient allocation of resources because firms will not allocate resources to the area where demand is high, to capitalise on higher profits. Under the WST, firms would stay clear of the highly taxed industries, as they wouldn't be as profitable..

Obviously expand a little bit, but yeah.
hope that helps

[redxman]

GST tax was brought in ~12 years ago. Can't use it.

[link125]

GST tax was brought in ~12 years ago. Can't use it.

Question doesn't ask to use a recently established tax

[lalor]

GST tax was brought in ~12 years ago. Can't use it.

Question doesn't ask to use a recently established tax

It's from the recent study design