Alcopops Tax Essay

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Pages: 8
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Question 1
Some economists argue that one of the key political motivations for the introduction of the alcopops tax is to correct for the negative externalities which abusers of alcopops impose on society. Using diagram(s) discuss how a tax on alcopops can correct for negative externalities associated with excessive consumption of alcopops.

In a publication by University of Southern Queensland (2008), it defines that ‘excise taxes are taxes imposed on sellers of certain goods and services, and they are usually substantially higher tan sales tax on regular goods’. Moreover, ‘tax incidence is the share of a tax ultimately paid by consumers or by buyers’ (Layton, Robinson & Tucker 2005). It depends on both elasticities of demand and …show more content…
Because of its popularity, people don't tend to think of it as a drug, or even realise that it can be harmful. But alcohol is the largest cause of drug-related deaths among Australian teenagers.
“AMA President, Dr Rosanna Capolingua, said urgent action was needed to end the binge drinking culture and change young Australians' attitudes towards alcohol.”[Youth Binge Drinking Culture Must End.(25 February 2008)]
Government have give a alcopops tax to batter for binge drinking. I’ll show how the tax work for ending binge drinking in the following essay.

Body

Since the early 1980s, a growing number of economists have examined the impact of the price of alcoholic beverages on alcohol consumption. This research, which has used a wide variety of data, generally has concluded that increases in the prices of alcoholic beverages lead to reductions in drinking and heavy drinking as well as in the consequences of alcohol use and abuse. This conclusion concurs with a fundamental law of economics called the downward sloping demand curve, which states that as the price of a product rises, the quantity demanded of that product falls. Since the price of alcohol can be manipulated through excise tax policies, the findings regarding the relationship between alcohol price and alcohol consumption clearly are relevant for policym akers interested in reducing alcohol consumption and its adverse consequences.
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