today is an era of liberalisation.government is?

Question

walking out of economic activities which it was engaged previously.but why tax to gdp
ratio has not fallen?atleast why an attempt to reduce tax is not even considered?is an era of low taxation inconsistent with era of liberalisation?

Answer 1

Taxes are Fiscal tools like interest rates and budget deficits used to contract or expand economies. The governments usually has targets for GDP or economy and if the economy grows faster on policies conducted to expand the economy gets overheated which is bad. So they use contractionary policies like raising taxes, raising interest rates etc;. So governments don't usually walk out of activities it previously engaged in it is only engaging itself in a way that is condusive to its policies of intervening rightfuly to set things right before it spins out of control.

Answer 2

They have to tax high because it is very expensive to educate all those people who can't spell or write.