CASE

You are part of the team of consultants who support the president and you must determine a tax policy for the next 6 years. The main taxes with which the government raises money are:

• Property tax (property tax). Considere p - the percentage of property tax .
• Sales tax on all items except food, medicines and durable goods. Consider s - the sales tax percentage .
• las Sales tax on durable goods. Withsidere d ' the percentage of tax on durable goods. .
• Gasoline tax. Consider g - the percentage of gasoline tax. .
• Food and medicine tax. Consider f' the percentage of food and drug tax..

States should be classified according to GDP into three groups: (IB) Low income, (IM) Medium income, (IA) high income. The amount of revenue (in millions of pesos) that isdi collected from each group based on a tax of 1% is shown in the table below.

	P	s	D	G	F
Ib	900	300	120	30	90
Im	1200	400	100	20	60
Ia	1000	250	60	10	40

For example, a 3% tax on durable goods would generate $360 million in the low income group. The tax policy you propose must meet the following conditions:

• Condition 1: The tax burden assigned to IM may not exceed $30.8 billion.
• Condition 2: The tax burden assigned to AI may not exceed $9.6 trillion.
• Condition 3: The total proceeds must be higher than the current level at $181 billion.
• Condition 4: Tax s must be between 1% and 3%.

Given these conditions, the aim is to achieve the following objectives:

• Objective Q: Keep the rate of property tax at less than 3%.
• Objective IB: Limit the tax burden for IB to $45 billion.
• Foreign target: If tax burdens are toohigh, 20% of people in the IB group, 20% of people in the IM group and 40% of people will consider moving abroad. Suppose this would happen if the tax burden is more than $25 trillion. To avoid this, this goal seeks to keep the total tax burden at less than $25 billion.

Use goal scheduling to determine optimal fiscal policy. Consider that the priorities of the objectives set are as follows:

IB >> P >> Foreign

• Explains how the solution methodology used and recommendations for the president (fiscal policy for each state and its implications) works. Be sure to meet the 4 conditions set to meet the objectives.
• Explains in detail how this policy should be implemented in terms of policy, governance and ethics. In addition to including recommendations and suggestions on policies implemented in economies with higher GDP.

NOTE1: Don't forget to cite all the sources of information consulted.

NOTE2: For state classification it is suggested to use the Pareto rule.