Governments tax the consumption of tobacco

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Why governments tax the consumption of alcohol and tobacco?

Less consumers and more revenues for the tax office is a reality in today’s World, the enormous amount of alcohol and tobaccoconsumption brings social disputes, addictions and smuggling just to mention a few, these lead to a higher taxation of the product.

Alcohol and tobacco are viewed as demerit goods that are not necessary forus to survive and therefore are liable to tax at a higher rate. These taxes are known as “sin taxes” and they are set partly to control and regulate the consumption of these goods.

We can observethat these products are taxed mainly for three reasons:

• Acquire revenue.
• Correct effects caused by consumption (Health and addiction problems)
• Prevent high consumption.

The World HealthOrganization (WHO) has concluded that if the tax for these products would be raised by 10% the consumption would be reduced between 2% and 4.5%, the taxes paid to the government will serve to cost theillnesses of the consumers and pay off part of the treatments related to the consumption of these goods. The people that have the availability to use this products are the ones that should have thepossibility to afford paying a high tax rate for this products, this is why, when the tax is risen we are helping reduce the consumption and decrease the rate of people with alcoholism problems, cancerpatients and others related to alcohol and tobacco consumption. The use of tobacco is one of the top causes of disease and premature death.

This kind of tax is necessary in our society and economybecause as mentioned before these are demerit goods and are not seen as socially correct and necessary. They do not affect the consumption of primary goods (Convenience goods), which we all need toobtain and should be more accessible for everyone. Therefore whomever wants to consume these demerit goods will have to pay a higher price and tax rate; these goods are not seen as favorable for us,...
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