Beer Tax in Economics - Assignment Example

The adverse impact of the tax hikes was phenomenal for casual drinkers as they massively reduced their consumption, thereby resulting in an overall decrease in aggregate beer demand. The producers were unable to increase prices substantially considering demand/consumption patterns and thus suffered stupendous financial losses. For instance, the producers adopted a downsizing strategy, which in turn resulted in 50,000 job losses. The revenues to the government also declined in general as the beer industry did not record significant market expansion and growth. The demand from hardcore drinkers also reduced as they switched to other cheap drinks to ensure the balance of their financial budgets. All in all, the rollback of levies/taxes would not lead to a mammoth rise in consumption; rather will reduce the financial burden on producers as well as consumers. Next, consumers would not change their drinking habits and start consuming irresponsibly; therefore, this is just a myth that the rollback of beer taxes may cause grave healthcare issues. Read More