Bringing Business Stability and Maintaining Full Employment Conditions: Another main objective of taxation is to bring about business stability and maintain full employment conditions. Low rate of taxation during a business depression shall accelerate more income to the people and help in raising demand and, thus, revive business activity. On the other hand, high rates of taxes and additional taxes may be useful to check inflationary pressure on prices. Thus, tax policy may be used as a regulatory mechanism to achieve price stability, check business booms and depression and also maintain full employment. Promoting Capital Formation: Another objective of taxation is the promotion of capital formation. With particular reference to underdeveloped and developing countries, One of the main objectives of taxation is to make savings more dynamic and promote capital formation. In underdeveloped countries, the savings can easily directed towards production and capital formation through the assistance of taxation. Political Objectives: Particularly in democratic countries taxation is used as a weapon for attaining political objectives. For instance, lower and middle-class voters may be attracted by imposing high taxes on rich people and luxury goods and nominal or no taxes on goods consumed by poor and middle-class people. Increase in National Income: Another objective of taxation is to increase the national income. Tax is the main source of the government income. This income is used for productive purposes and thereby overall production is increased. This increase in production leads to increase in national income of the country along with increase in per capita income. In underdeveloped countries, major part of the income is spent on economic development programmes which too increases national income as well as per capita income. Restrict Unnecessary Consumption: Another objective of taxation is to restrict the unnecessary consumption particularly of harmful commodities, such as wine.