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Why does the government need taxes? Answer: The government needs tax because it needs money to pay for hospitals,schools,and community service. In order for the people to have those services, they contribute to â¦ the fund. tax goes towards government spending on public services such as: healthcare, education, public transport etc...
Governments use spending and taxing powers to promote stable and sustainable growth. Itâs raining coins (photo: Matt Cardy/Getty Images). Fiscal policy is the use of government spending and taxation to influence the economy.Governments typically use fiscal policy to promote strong and sustainable growth and reduce poverty.overnments influence the economy by changing the level and types of taxes, the extent and composition of spending, and the degree and form of borrowing. Governments directly and indirectly influence the way resources are used in the economy.