Paul and Chris own Lucky's Liquor Store. They are careful to pay all of their taxes in full and on time. Recently, the local government has decided to raise the taxes imposed on the sale of cigarettes and liquor. Paul and Chris are upset about this because
A) they will certainly have to pay more taxes.
B) people will likely buy less cigarettes and liquor from them.
C) the government has increased the sales tax.
D) their personal property tax will now increase.

Question

Quizplus · Accepted Answer

Taxes can be used as a method of discouraging certain behaviors among taxpayers. In this case the government wants to reduce consumer use of cigarettes and liquor so it passed a sin tax on those products. The additional cost of the product from increased taxes will perhaps discourage additional consumption of these products. This means people will likely buy less from Paul and Chris.

Paul and Chris Own Lucky's Liquor Store