Subsidy

A subsidy or ‘government incentive’ is a form of financial aid or support extended to an economic sector (business, or individual) generally with the aim of promoting economic and social policy.

Although commonly extended from government, the term subsidy can relate to any type of support – for example from NGOs or as implicit subsidies. Subsidies come in various forms including: direct (cash grants, interest-free loans) and indirect (tax breaks, insurance, low-interest loans, accelerated depreciation, rent rebates).

Furthermore, they can be broad or narrow, legal or illegal, ethical or unethical.

The most common forms of subsidies are those to the producer or the consumer. Producer/production subsidies ensure producers are better off by supplying market price support, direct support, or payments to factors of production. Consumer/consumption subsidies commonly reduce the price of goods and services to the consumer.

Along with promotional advertising luring in vacationers; to entice business relocation to an area subsidies will be offered to seal the deal.

My parents subsidized me.

They paid for my clothing and meals so I would attend school. They gave me shelter and medical care so I had time to learn a trade and move out.

The payback was I was to take care of them in their old age. I paid my taxes.