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Implications of Increasing Taxes on Food


Examining the Implications of Increasing Taxes on Food


Taxes and subsidies

Frequently asked question

Preview Answer

- Briefly introduce the topic of taxation on food
- Provide background information on the issue
- State the purpose of the essay

I. Reasons why taxation on food should be implemented (up to ➡️5 marks)
- Raise total revenue for the government
- Demand for food is price inelastic, making it a good source of tax revenue
- Increased revenue can be used to fund important public services such as education and healthcare
- May reduce the problem of obesity and improve the health of the population
- Can reduce food wastage and lower costs of waste disposal

II. Reasons why taxation on food should not be implemented (up to ➡️5 marks)
- Taxes on food are regressive and take a higher proportion of the income of the poor
- Food is a necessity and taxing it may mean that the poor cannot afford sufficient food
- Taxing food may lead to cutting back on other necessities and increase poverty, thereby increasing inequality
- A tax on food may stimulate wage demands, increase costs of production, cause inflation, and increase government expenditure on healthcare
- Taxation on food may lead to lower labour productivity and there may be tax evasion

III. Potential consequences of implementing taxation on food (up to ➡️5 marks)
- Fall in demand for food may result in less production of food, leading to reduced employment in agriculture and food processing industries
- The impact of taxation on food may vary depending on the type of food and the level of taxation
- The government may need to consider alternative policies to address the issue of obesity and food wastage

- Summarize the main points of the essay
- Restate the thesis statement
- Provide a final thought on the issue of taxation on food

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