Normally, the idea of imposing hefty taxes on highly consumed unhealthy products looks like a winner. Higher taxes will drive up the price of these products which will make consumers and/or abusers think twice before purchasing these products. Also, taxation is one of the significant drivers of internally generated revenues. So, more tax means more money in the government coffers. These can be used to fund programs targeted at improving the public health and wellness of the citizens.
Aside from the financial gains, there are significant health benefits to be gained from making products like alcohol and cigarettes more expensive for the average folks. Cigarettes are notorious for causing lung cancer; alcohol does all sorts of wonderful nonsense to the kidneys. Sugar, a very important sweetener, is known for causing annoying mood swings, tooth decay, obesity, high blood pressure and type 2 diabetes. Less consumption of these products will improve our quality of life.
So, why is the government not imposing heavy taxes on these products since the benefits are handsome?
Well, a brief stroll around the neighborhood on a good Friday night would be revealing. Alcohol has become an integral part of humans. It is much more than a dangerous vice; it is the drink of choice in many get-togethers and parties. Its aesthetic value is unbelievable and it's always in demand. Will increasing the price of alcohol stop people from consuming it? No. What it will lead to though is reverse taxation.
The expensive nature of alcohol will not stop people from buying it or force them to reduce the quantity they consume. What it will do, however, is it will drag more people into poverty. With a considerable proportion of people's income going into purchasing stuff like alcohol and cigarettes, the poverty rate will increase. It may sound stupid that people will impoverish themselves because of habits they can easily relinquish. You'll probably understand how hard it is to let go of some things if you've been around addicts before.
Another problem that comes with hefty taxes on some products is the increase in black market activity. Humans don't enjoy the idea of being ordered around. Trying to force them away from some consumable will only make it more desirable to have. To get it, some will go to any length. Rumours have that even in religious settings where alcohol is banned, it is still being smuggled in but sold at a premium. Increased taxes will lead to a scramble for alternative routes to get cheaper products. Borders will be breached, and smuggling is certain. That poses some form of security risk.
For all the wonderful things the excess money derived from increased tax can be used to do, taking the step will leave some people in a worse state. Every company wants profit. Whenever economic snooze is tightened around the neck of a company, the first way to relieve the tension is to cut jobs. People will be sacked, and breadwinners of families will be rendered jobless.
In conclusion, one of the duties of the government is to protect its citizens and create job opportunities. It will be silly of them to take steps that will cost jobs and increase poverty. So as good as imposing hefty taxes on some products may look, the demerits mean most governments will not be towing that aggressive route.
