MANAGEMENT

Detailed explanation-1: -The main purposes of imposing sin taxes are to reduce the consumption of harmful goods and to increase government revenue. The consumption reduction is achieved by making the goods less affordable to consumers.

Detailed explanation-2: -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.

Detailed explanation-3: -Pigouvian taxes and sin taxes are quite similar and a specific levy may satisfy both categories. The key difference is that a Pigouvian tax seeks primarily to minimize negative externalities (i.e., harms to others or society as a whole), while sin taxes seek to reduce negative internalities (i.e., harms to oneself).

Detailed explanation-4: -Countries such as the UK, Sweden and Canada impose Sin Taxes on a series of products and services, from tobacco and alcohol to lotteries, gambling and fuel, which chip in with sizeable revenues.

Detailed explanation-5: -Ability to work, Save and Invest: Imposition of taxes reduces disposable income, more bitterly of the poor section, their purchasing power and ability to acquire necessities, comforts and luxuries. This reduces their consumption and therefore the ability to work and save.