The Opportunity Costs of Reducing Expenditures - Essay Example

Reducing expenditures meant foregoing the opportunity to serve the people and to provide services that could potentially prevent future problems. For example, healthcare programs could make the population healthier with the implication of lesser health costs in the future. In the case of education, reducing its expenditures may not be immediately felt but it will undermine the country’s competitiveness in the future because it would mean having a less educated workforce.

Raising taxes, however, is unpopular. But it will enable the government to fund its social services such as health and education. Excessive taxation however invites social unrest that could defeat its intent to provide services to the people. The repercussion of high taxation is political as policymakers may lose public support and will no longer win in elections.
Ultimately, governments have to balance between increasing taxes and reducing social services. Ideally, taxes should be low and social services should be high but that would not be possible since social services are expensive and it needs income through taxes to fund them. This explains why social services and taxation should be balanced. Read More