Supply and Demand Essay

The High Cost of Virtue

First of all, a tax is an amount charged by the government on goods and services. In this case, the British people are cutting back on vices to make the treasury grow stronger. A vice is a practice, behavior or habit considered immoral, degrading or unfit by the society. More than half the vice bill goes directly into government coffers. For example in the fiscal year 2010-11, nearly 10% of all taxes came from alcohol, tobacco, and gambling and vehicle excise duty tax. An excise tax is one that is set on a specific good or service. Sin taxes are also long enduring and are usually rather high. Sin taxes are placed on goods that are harmful to an individual and to society. The high tax placed on the cigarettes led to a decrease in the amount of people smoking, along with public health campaigns and smoking bans. This was an appropriate step taken as it reduced the number of smokers but also reduced the money that the government was getting. The government could respond by increasing the value of the sin taxes. However, this action would result in black markets opening so that the consumers could continue getting the same good or service for a lower price. It is particularly common with cigarettes since they are easy to import by individual smokers. It is also the same in the case of gambling. The operators are moving off shore to find more places where the gambling isn’t taxed as it is in Britain. Also, the petrol taxes are leaking quickly. Here too, the car and van mileage has been falling steadily for the last few years. Because of the increase in petrol prices, people are now buying different car brands or are buying cars with better engines. There is also the fact that some people have now started using public transport and other means of transport instead of cars. The oil prices have also been pushed up and there is not any amount of tax that can be placed to compensate for it without making it politically toxic. There is also the case...