This is an Australian news article that explains the specific tax imposed on alcoholic beverages. The specific tax is imposed on a specific good or product and has a fixed amount for each unit sold, it is proportional to the quantity of a product sold regardless of the price. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an original essay The article also covers the budget deficit. The budget deficit is an indicator of financial health in which expenditures exceed revenues. Budget deficit occurs when a government spends more than it collects in taxes. By increasing the tax on alcohol, this could be a way to close the budget deficit. The main purpose of a tax is to generate additional revenue on undeserving products and can also be used to dissuade people from purchasing that particular product. Alcohol is taxed specifically and indirectly. An indirect tax is a tax levied on goods and services rather than on income or profits and a specific tax is a tax which corresponds to a fixed amount for each unit of a good (or service) sold, such as than pounds per kilogram. It is therefore proportional to the particular quantity of a product sold, whatever its price. Shows the initial price of a good before the tax is increased, it also shows what effect the tax has and that it causes the supply curve to shift. Left. This means that there will be a new equilibrium price and a new equilibrium quantity. Therefore you can see that there is an increase in price and a decrease in quantity, this means that fewer people will buy for the increased price but you will make more money by taxing the remaining people. If buyers have many alternatives for a good with a new tax increase, they will generally respond to a price increase by reducing the quantity of the product they purchase. If sellers can easily switch to producing other goods, or if they respond to a slight reduction in payments by closing their business, then they will not accept a much lower price. This means that it will have lower elasticity. A problem for consumers is that the tax is not brand specific, meaning you can't just switch brands when a tax increases the tax on the product you usually buy, you have to find an alternative complete (eg from butter to margarine) or you can continue to pay for the good. “Increasing the price of alcohol, particularly cheap wine and cider, would increase tax revenue by A$2.9 billion a year and be a boon for public health.” This means that by increasing the tax on alcohol, you will find that it will stop some people from buying the alcohol because it becomes expensive, but you will make more money from people who will continue to buy the product. This extra income can be used for many things like research on the effect on alcohol, as mentioned in the article. Later in the article it is added: “The additional tax revenue could be spent in the health system targeting prevention and research on chronic diseases”, which supports the previous statement. Looking at the figures given throughout the article, it is clear that increasing a tax on alcohol would not only help balance the budget deficit, but would also be the best and most effective way to reduce consumption of alcohol throughout the continent and would reduce.