What Are The Advantages And Disadvantages Of Tax In Fast Food

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Introduction: Recently, Russian State Duma deputy has suggested the additional tax to be imposed over foreign fast food. Since the fast food is a demerit good it will be over-provided by the market and, because of this, it will be overconsumed. An important point is that such a good will be taxed because it is considered to be harmful for the society. The Russian government is attempting to reduce the quantity demanded for fast food and so, it wants to make the population healthier. In this case, the government rises the tax from 20 percent to 23 percent, which is a specific tax. It is the type of indirect tax in which the tax price is the same for each unit of a product. Analysis: The case of the additional tax on the fast food has to do with…show more content…
This will cause an increased additional public healthcare costs for the third party (government) because people will ignore the negative externality that they are creating and might develop different diseases. Advantages: The imposition of an additional tax will help to develop a healthier population by spending money on health services, creation of different health groups and organization of sports activities, which has to be a promotion for the healthier lifestyle. The revenue from taxes is the main income for the state. The taxes are funding public expenditure and it is benefiting the state because they are financing the costs of public goods. Disadvantages: Fast food has extremely elastic demand and even the slightest change can affect sales significantly. If the government wants to contribute to the budget, they should not increase the price for fast food. The producers will earn no profit in long-run. In the short-run, decreases in demand will cause output to decrease. Since the demand for fast food will decrease, the employment rate will increase and the production will decrease (higher

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