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HW 18/11/20 Redistribution of Income (Book Chapter-30) : Question-1

Increasing progressive taxes in Vietnam could help reduce inequality and poverty by generating more government revenue that could be spent on public services like education. However, higher taxes may also discourage business investment. Redistributing income through benefits payments or investing in education and healthcare may be more effective alternatives or could be combined with higher taxes for the greatest impact in reducing inequality and poverty in Vietnam.

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44 views

HW 18/11/20 Redistribution of Income (Book Chapter-30) : Question-1

Increasing progressive taxes in Vietnam could help reduce inequality and poverty by generating more government revenue that could be spent on public services like education. However, higher taxes may also discourage business investment. Redistributing income through benefits payments or investing in education and healthcare may be more effective alternatives or could be combined with higher taxes for the greatest impact in reducing inequality and poverty in Vietnam.

Uploaded by

Sharif Hossain
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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HW 18/11/20

Redistribution of income (Book chapter-30)


Question-1
(a)Define absolute poverty
(b)Define relative poverty
(c)Define income inequality
(d)Identify 4 reasons for inequality
(e) identify 2 reasons to reduce inequality
Question-2
A report by the charity Oxfam, stated that Vietnam has 210 super-rich people. Their
combined earnings for one year are enough to take 3.2 million people out of poverty
and end absolute poverty in Vietnam. To reduce inequality and poverty, Oxfam is
calling on international leaders to increase taxes to fund healthcare, education and
job creation. Oxfam also asked business leaders to pay employees a living wage and
pay their fair share of tax.

Policy can be
Redistribution through benefit payments Example for Unemployment benefit, Child benefit,
Old age pension

Investment in education and health care Education development, Health care development

(a) With reference to the data above and your knowledge of economics, evaluate
whether an increase in progressive taxes/ Redistribution through benefit
payments/ Investment in education and health care is the most effective way to
reduce inequality and poverty for a country such as Vietnam. (12)
Ans
AO2 and AO3
Define inequlaity
• There can be a reduction in inequality by taking lower average levels of tax from low
wage earners and taking more from higher earners
• Increasing progressive taxes will take more income from those on high-income levels
• If the Vietnamese government taxed the 210 super-rich at a higher rate of taxation,
the government would have more revenue
• This could be spent on public services such as education which could help to reduce
inequality and poverty
• If low income work has a lower rate of tax, it encourages people to enter the labour
force thereby reducing poverty

AO4
• Increasing the levels of progressive taxation can be difficult and unpopular
• Higher rates of progressive taxation may create a disincentive effect on higher
earners
• Similarly, higher corporation tax may discourage investment in Vietnam which may
have a negative impact on the economy
• However, it also depends at what level income tax is set as to its effectiveness

• There are alternatives to increasing progressive taxation which may be more effective
such as redistribution through benefits payments or investment in education and
healthcare
Or
(It will depend on other policy such as redistribution through benefits payments or
investment in education and healthcare)
• A combination of measures may be best in reducing levels of poverty and inequality in Vietnam

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