What is the role of taxation in a country’s economy?

Taxation plays a vital role in a country’s economy by providing the government with the revenue needed to fund public services, infrastructure, and social programs. Taxes are levied on income, goods and services, property, and various other economic activities. By adjusting tax rates and policies, governments can influence consumer behavior, redistribute wealth, and manage economic growth. Progressive tax systems, where higher earners pay a larger percentage of their income, aim to reduce inequality, while taxes on consumption (such as VAT or sales tax) can help regulate spending. Taxes are fundamental to sustaining government operations and ensuring the delivery of public goods and services.