This is an Australian article explaining the specific tax levied on alcoholic beverages. The specific tax is applied to a specific good or product and has a fixed amount for each unit sold, it is proportional to the quantity of a product sold regardless of the price. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essayThe article is also about the budget deficit. The budget deficit is an indicator of financial health where expenditures exceed revenues. Budget deficit occurs when a government spends more than it collects in taxes; Raising alcohol taxes could be one way to fix the budget deficit. The main purpose of a tax is to obtain additional revenue on waste goods and can also be used to dissuade people from purchasing that particular good. Alcohol is taxed specifically and indirectly. An indirect tax is a tax levied on goods and services rather than on income or any profits, and a specific tax is a tax that is a fixed amount for each unit of good (or service) sold, for example pounds per kilogram . It is therefore proportional to the particular quantity of a product sold, regardless of its price. It shows the original price of the good before the tax increase is added, it also shows what effect the tax has and what causes the supply curve to shift to the left. This means that there will be a new equilibrium price and a new equilibrium quantity. Therefore you can see that there is an increase in price and a decrease in quantity, this means that less people will buy for the increased price but you will make more money by taxing the remaining people. If buyers have many alternatives for a good with a new tax increase, they usually respond to a price increase by reducing the quantity of the product they purchase. If sellers could easily switch to producing other goods, or if they responded to even a small reduction in payments by going out of business, then they would not accept a much lower price. This means it would have less elasticity. One problem for consumers is that taxes are not brand specific, meaning you can't simply switch brands when a tax increases the tax on the product you normally buy, you have to find a complete alternative (e.g. from butter to margarine) or they can continue to pay for the good. “Increasing the price of alcohol, particularly cheap wine and cider, would increase tax revenues by A$2.9 billion per year and be a benefit to public health” meaning that by increasing taxes on alcohol will be found to stop some people from purchasing the alcohol as it becomes expensive, but you will make more money on the people who continue to purchase the product. This extra income can be used for many things such as research on the effects on alcohol as mentioned in the article. Later in the article it goes on to say, “The extra tax revenue could be spent on the healthcare system aimed at chronic disease prevention and research.” This supports the previous statement. Looking at the figures provided throughout the article it is clear that increasing the alcohol tax would not only help balance the budget deficit, but would also be the best and most effective way to decrease alcohol consumption across the continent and it would also reduce the harm done by alcohol overall. Keep in mind: this is just one example. Get a custom paper from our expert writers now. Get a Custom Essay The government adds taxes so you can earn income.