Question 23M.1.SL.TZ2.2b
| Date | May 2023 | Marks available | [Maximum mark: 15] | Reference code | 23M.1.SL.TZ2.2b |
| Level | SL | Paper | 1 | Time zone | TZ2 |
| Command term | Evaluate | Question number | b | Adapted from | N/A |
Using real-world examples, evaluate the view that inequality can best be reduced through the use of taxation.
[15]
Refer to Paper 1 markbands for May 2022 forward, available under the "My tests" tab > supplemental materials.
Answers may include:
- Terminology: inequality, taxation.
- Explanation: of the view in terms of the use of progressive taxes and how they can work to make the post-tax distribution of income more equal; the difficulty of reducing income inequalities through any means other than progressive taxation; the selective use of indirect taxes involving higher taxes on luxury goods consumed by the better off and lower taxes/no taxes on essential items needed by the poor.
- Diagram: use of an appropriate diagram, such as the Lorenz curve to show the impact on inequality.
- Synthesis (evaluate): a challenge to the view in terms of the possible disincentive effects of progressive taxation and the problems of using indirect taxes; a consideration of alternative measures such as use of transfer payments, a universal basic income, minimum wages, policies to reduce discrimination, other policies to reduce inequalities of opportunity, such as health and education.
- Examples: real-world examples of changes in taxation and/or other policies reducing inequality.
A maximum of [12] should be awarded if only changes in taxation are considered.
N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded.
Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.
Assessment Criteria
Part (b) 15 marks
There were many good answers to this question. Candidates effectively explained inequality and used the Lorenz curve and Gini coefficient to illustrate inequality. The best answers explained how progressive direct taxation can be used to reduce inequality and this was supported by effective real-world examples. The use of taxation was then evaluated by considering some of the disadvantages of using progressive taxation such as worker incentives and tax avoidance. It was good to see stronger answers discussing alternative methods of reducing inequality such as improvements in health and education. Lower-achieving responses talked in more general terms about increasing taxes which would affect lower-income households as well as the better off.
