Role of Budget-Tax Policy in Ensuring Sustainable Economic Growth

Abstract

Budget and tax policies are pivotal instruments in ensuring sustainable economic growth, encompassing a range of strategies that governments employ to manage finances and stimulate economic activity. Budget policy, involving decisions on government spending and borrowing, plays a critical role in allocating resources towards infrastructure development, education, healthcare, and social welfare programs. These allocations are essential for laying the foundation for long-term economic growth by enhancing productivity, human capital, and overall societal well-being. Tax policy, on the other hand, involves the formulation of strategies related to taxation rates, incentives, and exemptions. These policies are designed to influence economic behavior, encourage investment in key sectors such as renewable energy and technology, and ensure a stable revenue stream for funding public goods and services. By carefully balancing expenditure priorities and revenue generation mechanisms, governments can foster an environment conducive to sustained economic expansion while addressing social and environmental priorities.