Abstract
The opposite relationship that exists between socioeconomic status (SES) and inappropriate behaviors such as the use of tobacco, physical inactivity and unhealthy nutrition have been well illustrated empirically but entails various underlying mechanisms. These mechanisms have certain theoretical significance because inconsistency in health behaviors unlike imbalance in many other constituents of health, usually involve something more than the capacity to spend income in order to purchase good health. In addition, these behaviors have an attribute that in most times makes them of special desire. They commonly involve more than not having the ability to buy goods and services that encourage healthy living. On the basis of a review on a number of literatures in public health and economics, we categorize explanations of intensive smoking, less exercise, unhealthy diet and extra weight among the low socioeconomic status persons into nine broad categories that define related but conceptually different mechanisms. The government on the other hand enacts large amounts of taxes on these products so as to make them inaccessible to many individuals. The ultimate decision on whether to tax some of the consumption commodities more highly than others relies on the government’s policy objective that it is trying to achieve.
Introduction
States mostly depend on a wide range of revenue sources in order to finance spending program that is intended to benefit their citizens. Taxation is a general concept by which the government extracts money or other valuable things from individuals and organizations by the use of law. Usually on average, states normally generate more than two-thirds of the revenue from personal income and general sales taxes. The revenue that is remaining is divided between excise taxes on alcohol, cigarettes and gasoline, corporate income and taxes on utilities, property and other several sources. The taxes on these commodities are mostly inevitably regressive which falls more heavily on the middle and the low income taxpayers rather than the wealthy. The low income earners end up suffering eventually since they have to pay more in order to acquire some commodities as opposed to the wealthy since they don’t need the products as well. The government usually impose taxes so as to raise revenue and also to discourage a certain behavior or buying of certain commodities. Taxes such as those on sales of alcohol, gasoline and cigarettes are made on the basis of both grounds.
States in most times have more than one sales tax rate. Some governments apply a much lower tax rate on items such as the groceries and utilities, as a way of issuing low income earners relief. Other states apply a much higher tax rate on commodities consumed basically by tourists, typically the hotels and rental cars with an aim of transferring a portion of the sales tax to the residents of other states. Most states usually have more than one kind of sales tax. They have a general sales tax and a selective sales taxes on particular goods and services. The selective sales tax is a tax imposed on the purchase of tobacco, alcohol and gasoline or also a tax on some utilities such telephone services and also electricity. Selective sales tax are also referred to as excise taxes. Excise duties can be imposed and collected at the point of production or importation. These taxes are always refunded on goods being exported so as to encourage exports. Normally for similar commodities, excise taxes are the same for imported and domestically produced goods. Unlike the general sales taxes, the selective sales tax are commonly applied on a per unit basis as opposed to a percentage of the purchase price. In addition, excise taxes appear to be more regressive than general sales taxes. The main reason is because the taxes are not related to the item purchased. The excise tax paid on alcohol, beer and cigarettes is equal to that paid on less expensive brands. Every government which has a sales tax policy also has use tax which normally applies on commodities that are mostly bought from outside a state to be used within. Use tax are specifically created to prevent state residents from avoiding sales tax by buying goods from other states. Individuals who purchase such goods are required to report and then pay taxes on those goods.
The regressivity of tobacco excise taxes is high due to an additional characteristic where the low income individuals are far more likely to smoke than the wealthy individuals. Different from the categories of product and services where rich individuals appear to spend more than the middle and the lower income earners, cigarette consumption is more focused on the less wealthy people. A number of governments direct a portion of their gasoline tax revenue to funding environmental cleanups of gasoline leaks and spills. Taxes from gasoline are normally dedicated to financing the expansion and maintenance of infrastructure and the transport sector. The drivers who drive the furthest and most importantly on the heaviest vehicles result to wear and tear on most roads and eventually end up paying more in gasoline taxes. As the technology advances, a new fuel efficient technologies emerges which allows the drivers to purchase less gasoline while covering more distances and causing the same wear and tear on the roads. Levying excise duties as a percentage of the sales price instead of a flat per unit rate can lead to an additional revenue with time due to inflation. As inflation rises there is a corresponding increase in the commodities’ price.
Selective tax revenues seem to grow very slowly which results to an unreliable source of revenue in the long run. Consumption of cigarette has progressively declined as a result of the continued awareness of tobacco’s negative health effects in addition to the higher prices made by the cigarette excise taxes. The changes in the cigarette taxes and the prices which were introduced were of significant concern mostly to the cigarette companies. In addition, the close attention paid to the academic and the researches undertaken were of great impact on the prices and the taxes on smoking. This has caused a drastic change in the cigarette tax revenues for the state. After sometime as well gasoline consumption will diminish as well as the alternative sources of energy as technology continue to advance. The two will fail to generate sufficient sustainable revenue for growth and development purposes. The government in the long last will have to look for other sources to generate more revenue to finance its projects.
Conclusion
The long term effect of excise taxes is that it causes a decrease in the supply of the commodities on which the tax is to be applied. This in turn tends to lead to a rise in the price that the customers have to issue. Despite all the tireless efforts, the sales and the excise taxes are a vital constituent of state and local tax systems. The sales and excise tax reforms should concentrate on improving the existence of the revenues generated by these taxes. Best policies should be put into place to come up with better methods to generate revenue rather than relying on only few methods of taxation. This will result to sustainability and efficient ways to finance government projects in order to provide quality services for the benefit of all the citizens.
References
Jaffe AB. “Cigarettes”. In: Adams W, Brock J, eds. The structure of American industry, 10th ed.
Upper Saddle River, New Jersey: Prentice-Hall, Inc, 2001.
Scherer FM, Ross D. Industrial market structure and economic performance, 3rd ed. Boston:
Houghton Mifflin Company, 1990.
