Taxing Soft Drinks in Australia for Health and Control Measures
Taxing soft drinks in Australia is a control measure that the government can use in ensuring its potential taxpayers are safe and healthy. For instance in UK, the main reason behind taxing soft drinks is helping the children "grow up fit and healthy." At the same time reciprocate the raised money on kids sport. The government ought to have a control mechanism through which certain products' usage are restricted for the common good of the society. In this newspaper review, it shall look into the economic theory behind lobbing tax on soft drinks and linking it to the economic theories in the course study. "Tax on soft drinks with the money going to support healthy living," is a public choice theory. The writer says that, "I would not like living in a society where people don't get fat because sugary drinks are cheaper than water," directly pinpoints consumer demand theory at work. Therefore, the two theories connote to the theories of economics that we studied in lectures.
Explanation
Public choice theory deals with the study of taxation and public spending. It has the assumption that most people are motivated with their self-interest. Even though other people like the government base their or its actions for others' concerns in the marketplace, is actually their own concern. Some economist argued that, the best way in reining market failure like in monopolies is by government action introduction. However, the public choice theory pinpoints that there is as well government failure tampering with provision of services to the public. The major draw backs of public choice theory is voters' lack of incentives in monitoring the government efficiently thus loopholes exist through which government exploit the public though the citizens made a choice for the government to be in the position. However, in private sector, incentive ignorance is a rear occurrence because the buyer makes a decisive action before acquiring a product which will benefit him or her. The theory also examines various actions of legislators because legislators are always expected to pursue public interest as they make decisions.
Consumer Demand Theory
Consumer demand theory is a branch of economics that studies consumer behavior with reference to making decisions concerning the purchase of goods and services in various markets. It is centered majorly on utility generation from the satisfaction of needs and wants by using the principle of consumer demand theory of law of diminishing marginal utility. People tend to make choices on their consumption primarily based on the resources available. The concepts behind the theory are marginal utility and the Law of Diminishing Marginal Utility. The attestation of equi-marginal principle is that the utility maximum is reached when last goods consumed produce the exact marginal utility. The law of diminishing marginal utility states that the marginal utility obtained upon consuming a good decreases while the quantity consumed increases as depicted in the diagram below.
Application
Consumer demand theory is greatly applicable in understanding the consumer behavior in a specific market. It makes an understanding concerning human behavior be easy as well as his or her activities. Labor supply is easily understood in the analysis of trade between labor and leisure activities. The choice of committing a crime and not is well illustrated with the theory itself. Both time and effort devoted towards voting are attributed to consumer demand theory.
Implications and Opposition to Taxing Sugary Drinks
The article underpins taxing sugary drinks or rather soft drinks in discouraging its consumption. The new taxing proposal has attracted huge support from different quotas including officials like Jamie Oliver thus making it difficult opposing the move. In Australia, such tax is known as "sin tax". When it will be effective in Australia, sugar industry will raise a concern. Australian government usually tax industries heavy because of they are corporate bodies that drive the economy. When the sugar industry is taxed high, the government gets more revenue to fund its projects but negatively affects the operations of the sugar industry because of increased expenses thus cutting into their profits. However, due to public interest, Australia government raises tax on sugary drinks to discourage consumption. The article explains that such move will help the children grow fit and healthy and at the same time money raised to be used in supporting healthy living. The other reason is making Australia more equal in minimizing the age and income disparity. The government of Australia in her wisdom will be putting public choice theory into practice and in practical sensation.
The article explains that, "a tax on sugar would hit the poor most." This is because most poor people in Australia like sugary foodstuffs due to their cheapness and availability hence raising tax on them will have undesirable effects on them. The article still confirms that the "income inequality in Australia is wide" because the "average household makes four times as much as the bottom ten percent..." The best way to curb consumption consequences like obesity and lung cancer will be raising taxes on sugary industry but in an equal and fair measure with reference to most consumers' income. The consumer demand theory is used in explaining reasons as to the high demand for sugary foods especially soft drinks. In the article, the writer pinpoints that the price of sugary drinks is cheaper than water. When the price of a commodity like soft drink is cheap, the demand for such product usually goes high. This explains why most youths of Australia go for soft drink despite being aware of health consequences like obesity and lung cancer for long-term usage.
In Conclusion
In my own opinion raising more tax on soft drinks is uncalled for and lack much basis and I will use different players in the market in explaining my point. Coca-Cola company will lose its profits thus jeopardizes most of its operations in Australia. On the same note, there is no tax equity grated to the company as some companies making juices are tax low although they all fall under sugary industry. The sugary industry might device other tactics of evading tax or shifting to other favorable ventures that the government is taxing lowly. The general public will partly be affected like the poor in their consumption patterns. The poverty gap between the rich and the poor will widen hence giving opportunity for social evil to crouch in the society. Due to these reason, I tend to oppose the move by the government to lobby more tax on sugary industry like soft drinks because only a few people are affected by health effect of soft drinks.
Reference
Jason Murphy. (2016, March 19). Taxing your Coca-Cola. Refreshing! Retrieved from http://www.news.com.au/lifestyle/food/eat/taxing-your-cocacola-refreshing/news-story/d5037ee7aa9718bb6808d38575edf7dd
