ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A sin tax is a tax levied on goods or services that are considered to be harmful or costly to society. The goods and services commonly include tobacco, alcohol, sugar-added drinks, and gambling. The main purposes of imposing sin taxes are to reduce the consumption of harmful goods and to increase government revenue.

Detailed explanation-2: -What is its purpose and function as a government restriction on the use of individual property? A sin tax is a relatively high tax designed to raise revenue while reducing consumption of a socially undesirable product. The purpose of this tax is to discourage harmful behavior.

Detailed explanation-3: -The purpose of sin tax is to dissuade people form engaging in socially harmful activities, to reduce the consumption of these goods and to increase the governments’ revenue. Incidence of a tax: Incidence of a tax refers to the distribution of the burden of a tax between sellers and consumers.

Detailed explanation-4: -A pigouvian tax or sin tax is a tax levied on actions that have negative effects on others who are not directly involved, a pigouvian tax is essentially a tax on behavior. The tax increases the cost of the action in order to make consumers less likely to act in that way.

Detailed explanation-5: -Sin goods are goods which consider harmful to society. Example of sin goods: Alcohol and Tobacco, Candies, Drugs, Soft drinks, Fast foods, Coffee, Sugar, Gambling, etc. Taxes levied by the government on sin goods called Sin Tax.