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  • Piguvian Tax

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    Vandana Vasudevan
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    Pigouvian taxes are used to reduce negative externalities. They work by taxing activities based on their consumption level, so that the more one uses a product, the more they pay in taxes. This encourages reductions in products that cause negative externalities. Pigouvian taxes have advantages like reducing negative externalities and funding community programs. However, they also place a higher burden on businesses and don't completely stop people from using products that cause externalities. Overall, Pigouvian taxes are widely used because they are effective in reducing negative externalities while also generating tax revenue.

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    Pigouvian taxes are used to reduce negative externalities. They work by taxing activities based on their consumption level, so that the more one uses a product, the more they pay in taxes. This encourages reductions in products that cause negative externalities. Pigouvian taxes have advantages like reducing negative externalities and funding community programs. However, they also place a higher burden on businesses and don't completely stop people from using products that cause externalities. Overall, Pigouvian taxes are widely used because they are effective in reducing negative externalities while also generating tax revenue.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    7 views8 pages

    Piguvian Tax

    Uploaded by

    Vandana Vasudevan
    Pigouvian taxes are used to reduce negative externalities. They work by taxing activities based on their consumption level, so that the more one uses a product, the more they pay in taxes. This encourages reductions in products that cause negative externalities. Pigouvian taxes have advantages like reducing negative externalities and funding community programs. However, they also place a higher burden on businesses and don't completely stop people from using products that cause externalities. Overall, Pigouvian taxes are widely used because they are effective in reducing negative externalities while also generating tax revenue.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 8

    PIGOUVIAN TAX

    A tax that is used to reduce negative


    externality.
    Eg :Tax applied to Carbon emission to
    encourage entities to reduce their
    Carbon foot print.
    Also in Newsealand : Tax introduce to
    Cigarette ,Alcohol ,fossil fuel , CO2
    etc.
    HOW IT WORKS
    Works by taxing users according to
    their consumption .
    ‘More you use , more you pay.’
    Encourage a reduction in the
    product use.
    ADVANTAGES
     A reduction in negative
    externality.
    Money can be put back into the
    community & the event .
    Taxes the ‘rich’ though this could
    be seen as a disadvantage as well .
    DISADVANTAGES
    More burden for b/s .
    Cost implementation .

    Doesn’t stop people from using


    the product that cause –ve
    externality
    In short , it is used world
    wide because of it’s effectiveness .
    It’s effectiveness allows the
    government to put money back into
    the community event & provide
    essential infrastructure .
    Most important a reduction in –ve
    externality .
    y
    MPC + TAC

    MARGINAL
    PRIVATE COST

    P=MR

    TAX

    NEW REAL
    x
    OUTPUT OUTPUT
    THANK YOU

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