All roles of the governments need funding and also redistribution. No matter if providing public goods like education, spending on infrastructure, or distribution of income. All spending have to be “earned” somehow at a certain point in time. For a government, it is a key role to determine the taxation system and its effect on the economy, social equality but also other factors like competitiveness and more. Especially this role is one of the most discussed ones and leads also internationally to a lot of tensions when so-called “tax havens” appear.
As we see, the governments have a wide array of interests to take care of. Most problems also only can be addressed after they occur, especially since this is the case in managing externalities, social inequality, or market failures. The government only intervenes when there are structural problems occurring. This reactive stance of most governments is also causing a lot of troubles as the outcomes can be observed for a long time and most of the time governments only react when it is too late.
