Monday, August 29, 2011

The Economics of Vice Tax


!±8± The Economics of Vice Tax

A charge defect is an indirect form of taxation on goods sold as a vice, like alcohol, tobacco and petrol to some extent. The tax is included in the purchase price for these goods and paid by the dealer, rather than directly to customers, so an indirect tax. Sometimes in more than 50% of the current price - It may surprise you to realize that the goods are heavily taxed to come. It is a bizarre phenomenon, that these products have an artificially high valueand still survive in the market, even if the economic explanation for this clear.

A major problem with the taxes of the truck, which, indirectly, regressive, ie they refer to the poorest segments of the population than the richer segments. This is the result of an increase in alcohol consumption and abuse in health care more accessible to rich people. It 'also a social fact that smoking is often among the poorest communities. Although this was not the case, taxes would be vicemore regressive when considered as part of their income.

And how does the government and governments around the world come through this collection of high taxes in this way? Easily. This is a clear moral justification: for example, smoking is bad, in order to increase tobacco taxes to discourage people from smoking. The same goes for alcohol and gasoline, and like it or not, we all feel that this is justified. In addition, smoking is addictive. If you are a smoker,You must pay the price if cigarettes were $ 20 to the package to feed your addiction. Many smokers try would surrender, but the dependence is not always so easy, and many would still buy cigarettes at this price. It all comes down to being on these goods, which is economically, as the inelastic demand, ie the increase in the price per unit is known, a significant impact on sales. In fact, the inelastic demand in the examples, actually increases gradually increase total revenue. The absenceof alternatives means that people simply have no choice but to pay the price including tax, regardless of how high it goes. In economic terms, this form of taxation is a wise decision, and this has been for many governments to collect a huge amount of revenue last year from his estates in this comparison.


The Economics of Vice Tax

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