Question

A city wants to partially finance a stadium using a 6% tax on alcohol purchased at all restaurants in city. Describe the advantages and disadvantages of this plan in terms of vertical equity, horizontal equity, and the concept of a “sin tax”.

Answer 1

ANSWER:-

• Vertical value is a strategy for gathering income tax where the taxes paid increment with the measure of earned salary. The driving rule behind vertical value is that the individuals who can pay more taxes should to contribute more than the individuals who are most certainly not.
• This can be appeared differently in relation to flat value, whereby people with comparable salary and resources should pay a similar sum in taxes.
• A sin tax is an extract tax explicitly exacted on specific merchandise regarded unsafe to society and people, for instance liquor and tobacco, confections, drugs, soda pops, quick nourishments, espresso, sugar, betting, and sex entertainment.
• The advanatage in the event that we see is that it would have an effect of decrease of the acquisition of liquor and that is a decent effect , yet this is being utilized to fabricate an arena
• which would be utilized by just a specific gathering of individuals and therefore it would infer just a specific area of society would profit , which is somewhat of a flat appropriation , that is to individuals who might utilize the arena to do certain activites. In addition , when the liquor is bought , the tax is expanded for any individual purchasing the liquor , so that infers there is no vertical value present for this situation.

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