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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...
In what sense is inflation like a tax? Inflation is like a tax because everyone who holds money loses purchasing power. In a hyperinflation, the government increases the money supply rapidly, which leads to a high rate of inflation. Thus the government uses the inflation tax, instead of taxes, to finance its spending.