Question

Social Efficiency or Equity:  Which is more important economically?    

Answer 1

Given current production factors, performance is concerned with the optimum output and distribution of resources. Production at, for example, the lowest rate. Various forms of effectiveness Equity deals with how resources are spread through society.
Vertical equity involves the overall wealth and health of the population as a whole, e.g. overall deprivation when individuals have less than 50% of total income. Vertical equity is concerned with the fair allocation of wealth, which can entail higher tax rates for high-income earners.
Horizontal equity views all fairly in the same situation. For example anyone who makes £15,000 will pay the same tax rates.

The Community Charge (Poll Tax) was a tax on every citizen. Each person paying the same amount-irrespective of their income. It was deemed economically effective because it does not affect consumer activity by a poll tax. It has little effect on job benefits, because if you make more, the tax you pay will remain the same. However it was deemed unjust by making a millionaire pay the same tax as a poor pensioner.

It can be assumed that a tax on tobacco would improve the social effectiveness. Cigarettes have negative externalities which cause higher social costs than personal costs. The tax on cigarettes lets people pay the full social smoking expense and increases the social efficiency. A cigarette tax, however, is extremely regressive too. This takes up a larger proportion of low-income earners' profits.