How can taxes be used by the government to encourage or discourage the use of a
certain good or service

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07-05-2022
Business

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How can taxes be used by the government to encourage or discourage the use of a
certain good or service

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Frascoalexanderidn Frascoalexanderidn · Answer 1 · 2022-05-07T19:19:51-04:00

Frascoalexanderidn Frascoalexanderidn

07-05-2022

Answer:

Taxes can be used to increase the price of producing or selling something which discourages firms from engaging in that activity.
If the government wants to encourage a particular activity, they could subsidize firms who engage in it.

For example there are extra taxes on cigarettes because the government sees them as harmful, these extra taxes increase the price of ciggarettes.

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