Question

The textbook mentions that sometimes tax laws are enacted as to affect societal behavior. Research and post at least one tax or tax law that you believe affects the behavior of members of society, whether they are individuals or companies. Describe the desired effect.

Answer 1

One tax that affects the behavior of members of society is the ‘sin tax’. Sin tax is a tax that is imposed on a product whose consumption poses a health risk. For example tobacco based products and alcohol based products pose a health risk and as such governments in many countries impose a sin tax on these goods with an objective of discouraging people to buy these products and consume them.

This tax has affected societal behavior and many people reduce their consumption of such products due to the imposition of sin tax which makes these products expensive to buy. The disposable income of people is limited and they have to ration it among different items that have to be purchased. As such individuals in the society have to reduce the consumption of unhealthy products due to imposition of sin tax.