• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

The Chancellor of the Exchequer proposes an increase in taxation of alcoholic spirits, except beer and wine by 2%. - Write a 1500 word essay analyzing the impact on the groups likely to be affected and whether you think the representatives have a strong c

Extracts from this document...


The Chancellor of the Exchequer proposes an increase in taxation of alcoholic spirits, except beer and wine by 2%. A number of protests are made from various groups, amongst which a group of local representatives from Scotland arguing that Scotland is exempt of the tax. They approach you for an informed opinion. Write a 1500 word essay analyzing the impact on the groups likely to be affected and whether you think the representatives have a strong case. Tax is a useful policy instrument used by a government and affects people's lives in many ways. This devise for the government is an efficient way to raise revenue.(David Begg, 1994.) This tax proposal put forward by the Chancellor of the Exchequer is a normative statement, prescribing a tax increase of 2% on alcoholic spirits. Controversy is expected with this proposal and this taxation is already being questioned by some Scottish people. This proposal would have a great impact on the nation especially since it is taxing a good that is sells so well in the country. Many different sectors of society are affected by this proposal, therefore I must analyse what the effects of a 2% tax increase proposal considering all the varying sectors of society. ...read more.


Although the tax is being increased on alcohol every year these figures clearly show that the consumer is continuing to purchase alcohol. This in turn signifies that no matter how much tax is imposed on alcoholic spirits the consumer will continue buying it even though they are being burdened with the tax. Also it has been recorded that alcohol consumption has increased by 50% since 1970. (http://news.bbc.co.uk/1/hi/health/3533315.stm) This enhances my argument as to how alcoholic spirits have an inelastic demand. The consumer is willing to pay the tax on alcohol. This theory is illustrated on graph 2. The demand curve in this case is not very slanted (D) as the demand is relatively inelastic. The red shading shows the producer surplus, this is much less than that of alcoholic spirits with an elastic demand. The blue shading shows the producer surplus. Evidently the consumer pays much more tax than the producer in this case. This makes the price of alcoholic spirits more expensive for a consumer. In this case the beer and wine markets will not be affected as the consumer is willing to pay the increased amount of tax on the alcoholic spirits. ...read more.


If this tax is proposed it may well result in a great upheaval within the Scottish economy and result in subsequent jobs losses for many people as Scotch distilleries provide a high amount of employment e.g. the recent opening of Perthshire's Tullibardine Distillery, creating 120 jobs. The spirit industry is very popular too regarding tourism attracting thousands of people annually. (http://www.whiskymag.com/links/producers_and_distilleries.html) In conclusion, considering the situation of all the different market sectors and the Scottish viewpoint I understand that alcohol would be a major target for the government to propose indirect tax as demand will remain constant. This is a useful means of increasing government revenue. It is also apparent that alcohol is without a doubt very inelastic. Almost a constant amount is consumed regardless of price. (Page 182, Murray Wolfson, 1978.) This is only a proposal and the Chancellor of the Exchequer usually only increases alcohol taxation once a year in his budget. Scotland will have to work hard to support their case. The consumer loses out with this proposal, as he has to pay more as taxation is burdening him, however I have outlined his choices and he has available substitutes. In the end it is a question of a consumer's disposable income as to what extent this tax could potentially burden him. Word Count (excluding refernces.) =1,445 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Marketing & Research section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Marketing & Research essays


    Each department has a different function therefore does different activities. These activities are carried out, to meet the business objectives and to help the business to operate. Examples of functional area: * Production * Sales * Marketing * Finance * I.T * Personnel * Customer services * Human resources.

  2. Unit 1 Marketing Proposal: A01

    There are many things that could be included in marketing analysis such as market size, growth rate, profitability and trends, 4) product development so they begin making initial designs and concepts of the product so they can see what it would look like and if it is good enough to become a part of the business, 5)

  1. unit 2 recruitment in the work place

    at work, this could lead to a promotion being offered meaning a better job title and much higher pay. Promotions are like a booster for staff, as well as a great opportunity for the business as it will be able to understand their employee more easily.

  2. I am going to be writing about the concepts of marketing distinctiveness of the ...

    They are doing the right thing as many toys have labels or mark and state the correct thing and even with advertising an item on the website it will be checked by the ASA to make sure the product is advertised correctly and the information giving is accurate.

  1. Unit 2 Investigating business

    I am also going to have a secretary who will be doing all of the filing and any other basic office work. We have decided to have two main computers and two laptops on which will be installed data storage systems and Microsoft word packages so that the secretary and

  2. Applied Business Unit 2 Coursework

    I think that because this will be a very popular job role amoung younger citizens and students in the university because it is similar to work they have probably done in the past, I think that I would be better if I only advertise locally.

  1. Describe the factors that economic theory would suggest are likely to determine the demand ...

    This is mainly due to the fact that cigarettes have very few substitutes if any, and because they are addictive, a change in prices of cigarettes will have very little long-term effect on their quantity demanded. The main determinants of price elasticity of demand for cigarettes include: the number and

  2. Price Elasticity of Demand.

    A slope calculation incorporates only information about the extent of change in one variable as the other variable changes. An elasticity coefficient incorporates both the values of the two variables, price and quantity, at a particular point, and information about the extent of change in quantity demanded as price changes.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work