The topic of tax deductions and their influence on investment decisions has appeared in several IELTS Writing Task 2 questions over the past few years, particularly in questions about government policies and economic development. Based on analysis of past exams, this theme commonly appears in both Advantage/Disadvantage and Discussion essays. Let’s examine a recent real test question:
Some people believe that governments should offer tax deductions to encourage investment in the stock market and business ventures. Others think this money would be better spent on public services. Discuss both views and give your opinion.
Analysis of Question Requirements
- Topic: Government tax incentives for investors vs public service funding
- Task: Discussion + Opinion
- Key areas to cover:
- Arguments for tax deductions to investors
- Arguments for public service funding
- Personal stance with justification
Sample Essay 1 (Band 8.5)
The debate over whether governments should provide tax benefits to investors or allocate more resources to public services represents a crucial policy decision. While both approaches have their merits, I believe a balanced combination of these strategies would be most beneficial for economic development.
Those who support tax deductions for investors argue that such incentives can stimulate economic growth significantly. When individuals and corporations receive tax benefits for their investments, they are more likely to inject capital into new businesses and existing companies. This increased investment can create jobs, drive innovation, and generate additional tax revenue through economic expansion. For instance, many developed nations have successfully used capital gains tax reductions to encourage stock market participation and entrepreneurship.
However, proponents of increased public service funding contend that basic societal needs should take precedence. They maintain that government resources would be better utilized in improving healthcare, education, and infrastructure, which form the foundation of a prosperous society. Quality public services can enhance workforce productivity and create a stable environment for business operations. Furthermore, they argue that wealthy investors often do not require additional incentives to invest their capital.
In my view, governments should adopt a nuanced approach that combines both strategies. While tax deductions can effectively encourage investment in crucial sectors, they should be carefully targeted and monitored to prevent abuse. Simultaneously, a portion of the increased tax revenue generated through these investments should be channeled back into essential public services. This balanced approach ensures sustainable economic growth while maintaining social welfare.
Sample Essay 2 (Band 6.5)
The question of whether governments should give tax benefits to investors or spend more on public services is very important today. This essay will discuss both sides of this issue and share my opinion.
First, giving tax deductions to investors can help the economy grow. When people pay less tax on their investments, they will put more money in the stock market and start new businesses. This creates jobs and helps the economy become stronger. For example, when investors start new companies, they hire workers and buy equipment, which is good for everyone.
On the other hand, public services are very important for society. Things like hospitals, schools, and roads help everyone, not just rich people. If the government spends more money on these services, it can make life better for all citizens. Also, some people think rich investors will invest their money anyway, even without tax benefits.
I think governments should do both things. They can give some tax benefits to investors but also make sure there is enough money for public services. This way, the economy can grow and everyone can benefit from better services. The tax benefits should have rules to make sure they are used properly.
Key Vocabulary
- tax deductions (n) /tæks dɪˈdʌkʃənz/ – reductions in the amount of tax that must be paid
- fiscal incentives (n) /ˈfɪskəl ɪnˈsɛntɪvz/ – financial benefits offered by governments
- capital gains (n) /ˈkæpɪtəl geɪnz/ – profit from the sale of property or investments
- infrastructure (n) /ˈɪnfrəstrʌktʃər/ – basic physical systems of a country
- nuanced (adj) /ˈnjuːɑːnst/ – characterized by subtle differences
- channeled (v) /ˈtʃænəld/ – directed towards a particular purpose
- sustainable (adj) /səˈsteɪnəbəl/ – able to be maintained at a certain level
- entrepreneurship (n) /ˌɑːntrəprəˈnɜːʃɪp/ – the activity of starting new businesses
Consider practicing with these similar topics that might appear in future tests:
- Tax incentives for environmental protection
- Government subsidies for small businesses
- Corporate tax rates and economic growth
- Public-private partnerships in infrastructure development
Feel free to share your practice essays in the comments section for feedback and discussion.