The government can increase its revenues through the use of taxation. However, the government has to argue out on which taxes to increase in order to increase its revenues; increasing taxes of basic commodities would be unethical since this would affect a vast population. On the other hand, increasing taxes on services and products seen as vices in society such as tobacco and alcohol would only affect a few individuals. The government has to decide whether to increase the tax on tobacco and alcohol. In this assignment, I will discuss that the society can mitigate tobacco and alcohol consumption through taxation. Also, I will discuss that societies can improve their economies from revenues collected from sin taxes; the sin taxes will not affect all individuals, but will only concentrate on a few individuals, who consume socially proscribed commodities.
Every society has a role to play in providing public goods to the people. In society, the government has interests of the people at heart; it wants to improve the healthcare services and facilities so as to provide quality services to the people. However, there are some budget constraints since the government does not have enough resources to fund the provision of the services currently. This implies that the government has to use taxation to increase its revenues to assist in the provision of quality services to its people. However, the government should not increase tax on basic commodities since this will affect the majority, but the government can increase taxes on socially proscribed commodities such as tobacco and alcohol since this will only affect a few individuals. The revenues collected from the taxation of tobacco and alcohol can then be used in providing quality services to the people. Therefore, the Congress should raise the debate on increasing taxes on alcohol and tobacco to obtain extra revenues.
Increasing taxes on tobacco and alcohol has a political problem. The revenues generated from increasing taxes on tobacco and alcohol is lower than the economic cost of providing healthcare services to alcohol and tobacco users. This implies that it would be better reducing the usage of alcohol and tobacco than increasing taxes on these commodities; in order to facilitate quality health services to users of alcohol and tobacco. Therefore, there will be a contradiction on whether to adopt the policy of raising taxes on tobacco and alcohol.
The second problem is the ethical issue in increasing taxes on alcohol and tobacco. It is unethical for the federal government to increase taxes on behavior considered undesirable. The revenues collected from increasing taxes from undesirable behavior will be less than the economic cost of solving problems emanating from the undesired behavior (Gravelle & Joseph, 2005). The government will use more resources in providing healthcare relating to alcohol problems than the revenues collected from taxation of alcohol.
The government should evaluate its preparedness in dealing with problems associated with increasing taxes on tobacco and alcohol. There is unforeseen problem of increased consumption of tobacco and alcohol, which leads to more health problems. Increasing taxes on tobacco and alcohol will make users consumer cheaper alcohol and tobacco, which implies that they consume more since the commodity they use now is cheaper than the original. This will lead to health problems prompting the government to use more money in providing healthcare. However, the overall effect of increasing taxes will be reducing consumption of tobacco and alcohol since the taxes reduce the affordability of the commodities.
Although increasing taxes on tobacco and alcohol is viewed as a way, in which, the government can use to collect additional revenues, the government has to evaluate the cost of providing health services to the people since increasing taxes on these products increases health problems. Health problems are increased since the taxes make consumers consider using cheaper commodities, which they use excessively due to the price value. This increases health problems. However, the taxes will reduce consumption of alcohol and tobacco in the long run.