This website uses cookies to ensure you have the best experience. Learn more

Effect Of Taxation Essay

740 words - 3 pages

The effects of taxation and price control on the economy range from thecurtailment of the supply of goods to the increase of costs. When there is a tax impose ongoods like tobacco or cigarette as described in the two articles, there is an increase in theprice of the product, this shifts the supply curve of the product to the left, in other wordsless quantity is available at the same prices, there is a decline in the quantity demandedand a new equilibrium between demand and supply is reached. On the other hands whenprice controls are imposed there is an artificial decline in the prices.At the lower prices, a higher quantity is demanded but the production is insufficient tofulfill that demand and so a shortage remain. There are stock outs. So in case ofimposition of taxes as has been done in case of cigarettes, there is excess productioncapacity and the factors of production have to be diverted to other industries or sectors.Alternately, the production can be exported.The intended effect is that the incidence of smoking gets reduced. The tax is levied on theconsumers. This is the reason why the proposed tax of $1 will increase the price of acigarette pack by $1. For administrative reasons the tax may be collected from theproducers, however, this tax is clearly on the consumers.The tax will affect the demand for cigarettes. It has been shown through several empiricalstudies that imposition of taxes leads to a decrease in smoking. Those states that haveimposed taxes have witnessed lower levels of smoking and those states that have notimposed steep taxes have witnessed lower levels of reduction in smoking.As smoking becomes more expensive, the number of cigarettes smoked falls. There is nodirect effect on the supply, however, when the demand for cigarettes fall the supply willbe reduced. Several factors of production that are employed in producing cigarettes willbe unemployed. Employees will have to leave for other industries. Land and buildingsthat are involved in cigarette production and distribution will be reduced. For instance,the New York offices of Altria are being closed down and about 400 workers will be laidoff.The increase in taxes will affect the equilibrium price and quantity. The price ofcigarettes will go up initially by $1 if a tax of $1 is imposed. However, in reaction to theadditional taxation and reduction in demand,...

Find Another Essay On Effect of Taxation

Taxation and Political Stability Essay

2234 words - 9 pages The proposed analysis: taxation and stability policy with a sample of 60 countries around the world during the period 2002 to 2008, helping to make distinctions between the political instability experienced but maintained high taxation, and those states with political stability but with a low taxation. The few variables that are used in the model, and its reduction to a two-way relationship is one of its merits, when compared with other models

Progressive Taxation Better for Fairness Essay

2274 words - 10 pages Progressive Taxation Better for Fairness Introduction Nowadays, a number of countries have seen impressive economic growth after adopting the flat tax system. This is the particular case for Russia; United States has continued to run massive budget deficits while Russia has already brought its budget back into balance in 2010(Adomanis, 2012). However, More countries enjoy great economic gains from progressive tax system than from flat tax system

Effects of Overconsumption and Extreme Consumerism

1646 words - 7 pages improved simply by shifting food prices (Andreyeva). Increasing taxation on certain foods will result in the increase of their total cost, thus lowering the appeal of such foods, and ultimately reducing their consumption by the population. This approach can be used to target high calorie unhealthy foods and snacks (Mytton). Ultimately, higher taxation approach can reduce the overconsumption of high calorie foods by reducing their appeal to the

The Flat Tax

992 words - 4 pages Colorado, Illinois, Indiana, Massachusetts, Pennsylvania, Rhode Island, and Utah (Smatrakalev, 2011, p. 72). Most of the flat tax plans, either proposed or in use, offer several common advantages including, a flat tax rate of less than 20 percent that is consumption-based, elimination of favoritism to special groups, elimination of double taxation of savings and investments, elimination of global taxation, and the provision of a family-friendly

tobacco use

1222 words - 5 pages contributors generating tangible results. It should be mentioned that these tools and mechanisms could be integrated in the different areas of policy implementation. Still the most frequently recognized directions are: taxation policy and restrictions. “Do Taxes really affect the consumption of cigarette?” Tax Policy • Main Goal – taxation policy is a well-known economic tool associated for the competitive market, which can generate effect on

How British military measures and the restriction of civil liberties prompted the Americans to rebel

1296 words - 5 pages liberties were really important factors in prompting the Americans to rebel in 1776, although the Parliamentary taxation prompted them to rebel the most.First, Parliamentary taxation prompted the Americans to rebel the most. The Sugar Act, the Stamp Act, and the Townshend Duties were the primary taxes and duties that ultimately led the colonists to rebel. The Sugar Act of 1764 was a tax designed to eliminate French and Spanish trade by raising

Double Taxation Relief

3628 words - 15 pages INTRODUCTIONThe purpose of this paper is to provide a means to minimize or eliminate double taxation through double taxation relief, to reduce the risk of under taxation by promoting cooperation among countries. As far as we know lower overall taxation encourages trade and investment as well as opportunity for growth and profits. The possibility of double taxation arises when two or more countries claim simultaneous jurisdiction to tax the same

Why Do We Have Taxes?

2096 words - 9 pages countries, tax arrangement is frequently the specialty of the conceivable as opposed to the quest for the ideal. It is consequently not astounding the economic theory and particularly ideal taxation literature have had moderately little effect on the outline of tax system in these countries. In examining tax policy issues confronting numerous developing countries today, the creators of this handout hence draw on broad handy, direct encounter with the

The Difference between Zakat, Conventional and Islamic Taxation

1973 words - 8 pages . Taxation is among the ways in which government can lessen income inequalities. Taxes are done in order to correct the over allocation of resources associated with negative externalities. Taxation is a method of transferring resources from the private to the public sector. In the early centuries of Islamic State, only Zakat was collected from Muslim and Islamic Tax was introduced by Caliph Umar Al-Khattab which is imposed to non-Muslim. The

Dividend Tax

1576 words - 6 pages of corporate income. Which is a “double taxation”( The double taxation raises the questions of whether the tax should be eliminated, and which taxes should be cut. With both sides ..., the dividend tax … because…, The dividend tax was introduced in 1936 by President Roosevelt in the New Deal (Levey). The Economic Growth and Tax Relief Reconciliation Act of 2001 introduced lower

The Circular Flow of Income and The affect of Leakages and Injections on Commercial activity in our Economy

682 words - 3 pages economic to increase stability or to slow it down to prevent a crash. The government can effect all sectors of the economy and by increasing expenditure (injections) they can help stimulate the economy and the rate of production, trade and commercial activity. If the economy seems to be growing at an unstable rate that shows evidence of a potential crash then the government can increase leakages through taxation rises.�

Similar Essays

Progressive Preference Essay

2678 words - 11 pages multiplier effect of hiring and producing to lead to economic growth. The same principle can be applied to progressive taxation; lower taxes on the consumer compared to the producer encourages the consumer to spend more of their money, and therefore, on a macroeconomic scale, induces expansion. When a policy of taxation results in overall economic prosperity, the system is more effective because it benefits all of the taxpayers due to the improved

Taxation Essay

813 words - 3 pages the equilibrium, should there be a shortage, there will be factors of negativeconsequences meaning he price ceiling, but if the price floor should set below the equilibrium emerge ofsurplus will be a factor leading to negative situation and been above no effect which means the obsoletegood has an efficiency fall.The biggest taxation is federal. Federal tax first imposed in 1862 for the financing of the civil warwages. Consumer incomes were levied

Cri Etos Crietos Essay

1850 words - 7 pages wealth. In this view, economic realities are building a compelling case for a more progressive tax system. But judging from the experience of other wealthy countries, the opposite may be true. As inequality has risen in the developed world, many governments have been dismantling - not increasing - estate taxes. Countries from Austria to Canada to Sweden have abolished estate taxes outright. There is nothing inevitable about high estate taxation

Tax System Definition Essay

1248 words - 5 pages , administration costs, and influence the behaviors of taxpayers. According to the government, "Taxation imposes economic costs on society arising from the costs of compliance and administration, and the effects on taxpayer behaviour" (www.beehive.govt). These three components represent the operating costs of New Zealand tax system.Compliance costsJeff (200?) indicates that the compliance costs of taxation are consisting of both economic and non-economic