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Revenue neutrality a better way to tax negative externalities

Comments on Lennert Veerman, Senior health economist, Cancer Council NSW “Taxing sugary drinks would boost productivity, not just health”, 22/06/2017

While the argument for a tax on sugary drinks may have some appeal for a number of reasons including the additional and new reason put forwarded by the author of this post, there is a danger that a country or politicians in a country may simply look for revenue sources to increase tax revenue, as opposed to achieving health and productivity benefits. Caution must be exercised in calling for a new tax, because it is not always good to increase taxes to raise further the burdens to taxpayers.

As a result, I would suggest that such a tax, and that may be better named, should be designed and done in such a way that it is revenue neutral and any tax revenue raised should be returned/redistributed among all taxpayers or citizens/residents of a jurisdiction in perhaps an equally manner, as opposed to being retained by the tax authorities.

I would further argue that if taxes for a particular purpose is done in such a way, supports for introducing those taxes will be much greater and policies to address some ill effects or negative externalities will be much easier to be carried out and implemented, therefore the objectives for addressing those problems can be achieved earlier and faster.

We should change the way how we approach and address things/issues/problems.

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