Taxation policy refers to the rules and guidelines that governments use to collect taxes from individuals and businesses. This policy determines how much tax is levied, the types of taxes imposed (such as income tax, sales tax, and property tax), and the methods of collection. It plays a crucial role in funding public services like education, healthcare, and infrastructure. Governments often adjust their taxation policies to address economic conditions, promote growth, or reduce inequality. For example, during a recession, a government might lower taxes to encourage spending, while in times of economic boom, it may increase taxes to manage inflation and fund public projects.