“Taxation is an effective tool to reduce the inequalities of income.” Justify the given statement with valid reasons.

Government can use taxation as an effective tool to reduce inequalities of income, as it affects the disposable income of people. It may impose higher taxes on the rich and may provide subsidies to the economically weaker sections of the society on education, health services etc. By adopting these measures, the government may try to bridge the gap between the rich and the poor.