Question

"The government generally levies higher Goods and Services Tax (GST) on socially undesirable products like cigarettes, tobacco, liquor etc."

Identify and explain the indicated government budget objective in the above statement. 

Answer 1

The government budget objective indicated in the statement is "Regulating Consumption of Harmful Goods" under Fiscal Policy Measures.

• Higher GST on harmful goods such as cigarettes, tobacco, and liquor discourages their consumption.
• It is part of the "Sin Tax" concept, aiming to reduce the negative externalities associated with these products.
• It also helps the government generate additional revenue while promoting public health.