Correct Answer: To provide a tax break for certain activities or groups

Solution : The correct answer is (d) To provide a tax break for certain activities or groups

The purpose of a tax expenditure is to provide a tax break or preferential treatment for certain activities, groups, or economic sectors. Tax expenditures are essentially provisions in the tax code that deviate from the standard tax rules and allow for reduced tax liability or exemptions for specific purposes.

Tax expenditures are intended to achieve various policy objectives, such as promoting economic development, incentivizing certain behaviors, supporting specific industries, or providing assistance to targeted groups or individuals. By providing tax benefits, governments aim to encourage or support activities that are considered socially or economically desirable.

Examples of tax expenditures include tax deductions, credits, exemptions, or preferential tax rates provided for activities like charitable donations, mortgage interest payments, research and development expenditures, or investment in renewable energy. These tax breaks are designed to stimulate certain behaviors, sectors, or investments by reducing the tax burden on individuals, businesses, or specific industries.