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How can taxes be used by the government to encourage or discourage the use of a certain good or service
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How can taxes be used by the government to encourage or discourage the use of a

certain good or service

User Steve A
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1 Answer

7 votes

Answer:

Taxes can be used to increase the price of producing or selling something which discourages firms from engaging in that activity.
If the government wants to encourage a particular activity, they could subsidize firms who engage in it.

For example there are extra taxes on cigarettes because the government sees them as harmful, these extra taxes increase the price of ciggarettes.

User Paul Karam
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