Subsidies could take the form of tax breaks or cash or low-interest loans that are secured. They are usually intended to encourage a particular economic activity or meet a social or political goal. However, subsidies may be harmful and can hinder more efficient public spending.

Substitutes are a type of reverse taxation, in that they grant business or individuals money to engage in an activity instead of charging them to do this (for example tax incentives, tax breaks as well as student loans that are free). Governments frequently provide subsidies to products and activities based on their economic and environmental advantages.

Governments may, for example they can help to finance the production and use of renewable energy by offering tax breaks that encourage its use. They can also require utilities to purchase this energy. In addition, they may help subsidize housing costs by providing grants or loans that helps to cover a portion of cost of renting or buying an apartment. This myrrdin-inc.com/2020/03/10/what-digital-technologies-should-be-invested-in-2020 allows more people to reside in areas they might not be able to afford otherwise.

The goal of subsidy programs may differ however, they are usually targeted at achieving a certain national strategic goal or gaining a competitive advantage on international markets. In other cases, they are designed to offset the inherent weaknesses or structural weaknesses within the local economy. In the field of agriculture, for instance producer subsidies can help support prices above those of imported foods. These types of subsidies can cause distortions in market prices and an improper allocation or scarce resources.